San Clemente City Council
February 6, 2024

Actuarial Review of the Self-Insured
Liability Program
Forecast & SIR Options for Program Year 2023-24
Presented to
City of San Clemente
August 2, 2023
ATTACHMENT 1
180 Promenade Circle, Suite 300, Sacramento, CA 95834 • (916) 244-1160 • www.bickmoreactuarial.net

SCOPE AND SIGNATURE
The City of San Clemente (“the City”) has engaged Bickmore Actuarial to conduct an actuarial review of its historical loss and loss adjustment expenses for claims valued as of December 31, 2022 for its self-insured liability program. The City seeks guidance on the appropriate funding level for claims to be incurred during the upcoming program year.

The specific objectives of the study are:

1. Project ultimate claims costs (net of reinsurance) for the 2023-24 program year, presented on both an undiscounted basis as well as a discounted basis. The projected costs are also presented at the expected level (i.e. without a risk margin) and with risk margins, which are quantified via confidence levels. They include provisions for loss, allocated loss adjustment expense (ALAE), but not unallocated loss adjustment expense (ULAE). ALAE and ULAE are defined in the Glossary section of this report.

2. Compare total projected costs at various self-insured retention (SIR) levels, including actuarial estimates but not excess insurance premiums. Note that expected is a statistical estimate, and actual experience can vary significantly, resulting in either savings or additional costs.

We appreciate the opportunity to be of service to the City in preparing this report. Please feel free to call Derek Burkhalter at (916) 244-1167 or Nina Gau at (916) 244-1193 with any questions you may have concerning this report.

Derek Burkhalter and Nina Gau meet the Casualty Actuarial Society continuing education requirements and the American Academy of Actuaries’ qualification standards to sign Statements of Actuarial Opinion.

Nina Gau, FCAS, MAAA
Vice President and Principal
Derek Burkhalter, ACAS, MAAA
Senior Actuarial Manager
Joe Gaulaba
Assistant Actuarial Analyst
City of San Clemente
Liability Actuarial Study
2 TABLE OF CONTENTS
SCOPE AND SIGNATURE 1
BACKGROUND 3
EXECUTIVE SUMMARY 3
Loss Rate Trend 8
Average Claim Size (Severity) Trend 9
Claim Frequency Trend 10
Losses by Component 11
METHODOLOGY 13
CONSIDERATIONS AND KEY ASSUMPTIONS 15
CONDITIONS AND LIMITATIONS 18
DISTRIBUTION AND USE 19
GLOSSARY OF ACTUARIAL TERMS 20
EXHIBITS AND APPENDICES 22
City of San Clemente
Liability Actuarial Study
3 BACKGROUND
The City of San Clemente currently receives coverage for its general liability claims as a member of the California Joint Powers Insurance Authority (CJPIA). We understand the City is considering a transition to self-insurance for its liability program. The purpose of this study, therefore, is to provide ultimate loss cost projections for the upcoming fiscal year at various self-insurance retention (SIR) levels.

EXECUTIVE SUMMARY
Funding Projections
The following tables present our estimates of ultimate costs for the upcoming program year assuming SIRs of $100,000, $150,000, $200,000, $250,000, $350,000, $500,000, $750,000 and $1,000,000, respectively.

Projected Ultimate Costs
Fiscal Year 2023-24, SIR of $100,000
Í Confidence Level Î
Dollars ($000s) Expected1 70% 75% 80% 85% 90%
Loss & ALAE $629 $743 $798 $862 $942 $1,049
NPV Adjustment2 (23) (27) (30) (32) (35) (38)
Discounted Loss & LAE $606 $716 $768 $830 $907 $1,011
Total Funding Rate3 $3.20 $3.78 $4.05 $4.38 $4.79 $5.33 Projected Ultimate Costs
Fiscal Year 2023-24, SIR of $150,000
Í Confidence Level Î
Dollars ($000s) Expected1 70% 75% 80% 85% 90%
Loss & ALAE $944 $1,113 $1,193 $1,288 $1,407 $1,564
NPV Adjustment2 (42) (50) (53) (58) (63) (69)
Discounted Loss & LAE $902 $1,063 $1,140 $1,230 $1,344 $1,495 Total Funding Rate3 $4.76 $5.61 $6.02 $6.49 $7.09 $7.89

City of San Clemente
Liability Actuarial Study
4 Projected Ultimate Costs
Fiscal Year 2023-24, SIR of $200,000
Í Confidence Level Î
Dollars ($000s) Expected1 70% 75% 80% 85% 90%
Loss & ALAE $1,136 $1,339 $1,437 $1,552 $1,696 $1,888
NPV Adjustment2 (55) (65) (70) (75) (82) (91)
Discounted Loss & LAE $1,081 $1,274 $1,367 $1,477 $1,614 $1,797 Total Funding Rate3 $5.70 $6.72 $7.21 $7.79 $8.52 $9.48 Projected Ultimate Costs
Fiscal Year 2023-24, SIR of $250,000
Í Confidence Level Î
Dollars ($000s) Expected1 70% 75% 80% 85% 90%
Loss & ALAE $1,294 $1,527 $1,638 $1,770 $1,936 $2,157
NPV Adjustment2 (64) (76) (81) (87) (96) (107)
Discounted Loss & LAE $1,230 $1,451 $1,557 $1,683 $1,840 $2,050 Total Funding Rate3 $6.490 $7.656 $8.216 $8.881 $9.709 $10.817 Projected Ultimate Costs
Fiscal Year 2023-24, SIR of $300,000
Í Confidence Level Î
Dollars ($000s) Expected1 70% 75% 80% 85% 90%
Loss & ALAE $1,436 $1,696 $1,821 $1,967 $2,153 $2,400
NPV Adjustment2 (73) (86) (93) (100) (110) (122)
Discounted Loss & LAE $1,363 $1,610 $1,728 $1,867 $2,043 $2,278 Total Funding Rate3 $7.19 $8.50 $9.12 $9.85 $10.78 $12.02 Projected Ultimate Costs
Fiscal Year 2023-24, SIR of $400,000
Í Confidence Level Î
Dollars ($000s) Expected1 70% 75% 80% 85% 90%
Loss & ALAE $1,672 $1,975 $2,122 $2,296 $2,515 $2,806
NPV Adjustment2 (88) (104) (112) (121) (133) (148)
Discounted Loss & LAE $1,584 $1,871 $2,010 $2,175 $2,382 $2,658 Total Funding Rate3 $8.36 $9.87 $10.61 $11.48 $12.57 $14.03

City of San Clemente
Liability Actuarial Study
5 Projected Ultimate Costs
Fiscal Year 2023-24, SIR of $500,000
Í Confidence Level Î
Dollars ($000s) Expected1 70% 75% 80% 85% 90%
Loss & ALAE $1,878 $2,220 $2,385 $2,582 $2,830 $3,159
NPV Adjustment2 (101) (120) (128) (139) (152) (170)
Discounted Loss & LAE $1,777 $2,100 $2,257 $2,443 $2,678 $2,989 Total Funding Rate3 $9.377 $11.081 $11.909 $12.891 $14.131 $15.772 Projected Ultimate Costs
Fiscal Year 2023-24, SIR of $750,000
Í Confidence Level Î
Dollars ($000s) Expected1 70% 75% 80% 85% 90%
Loss & ALAE $2,248 $2,659 $2,862 $3,104 $3,406 $3,810
NPV Adjustment2 (124) (146) (158) (171) (188) (210)
Discounted Loss & LAE $2,124 $2,513 $2,704 $2,933 $3,218 $3,600 Total Funding Rate3 $11.208 $13.260 $14.268 $15.476 $16.980 $18.996 Projected Ultimate Costs
Fiscal Year 2023-24, SIR of $1,000,000
Í Confidence Level Î
Dollars ($000s) Expected1 70% 75% 80% 85% 90%
Loss & ALAE $2,538 $3,000 $3,233 $3,510 $3,855 $4,320
NPV Adjustment2 (142) (168) (180) (196) (215) (242)
Discounted Loss & LAE $2,396 $2,832 $3,053 $3,314 $3,640 $4,078 Total Funding Rate3 $12.643 $14.943 $16.110 $17.487 $19.207 $21.518 1 Expected values represent the “best actuarial” or “central” estimate. 2 Net present value is based on an annual discount rate of 2.0%. 3 Rate is per $100 of payroll.

City of San Clemente
Liability Actuarial Study
6 The following is a summarized comparison of the projected ultimate loss costs based on the detailed tables for each SIR listed above.

City of San Clemente
Self-Insured General Liability Program
Discounted Projected Ultimate Costs1 for 2023-24
($000s)
Marginally Recommended Range
Acceptable Low Target High Conservative
SIR Expected 70% CL 75% CL 80% CL 85% CL 90% CL
$100,000 $606 $716 $768 $830 $907 $1,011
150,000 902 1,063 1,140 1,230 1,344 1,495
200,000 1,081 1,274 1,367 1,477 1,614 1,797
250,000 1,230 1,451 1,557 1,683 1,840 2,050
300,000 1,363 1,610 1,728 1,867 2,043 2,278
400,000 1,584 1,871 2,010 2,175 2,382 2,658
500,000 1,777 2,100 2,257 2,443 2,678 2,989
750,000 2,124 2,513 2,704 2,933 3,218 3,600
1,000,000 2,396 2,832 3,053 3,314 3,640 4,078
City of San Clemente
Self-Insured General Liability Program
Discounted Rates per $100 of Payroll for 2023-24
Marginally Recommended Range
Acceptable Low Target High Conservative
SIR Expected 70% CL 75% CL 80% CL 85% CL 90% CL
$100,000 $3.20 $3.78 $4.05 $4.38 $4.79 $5.33
150,000 4.76 5.61 6.02 6.49 7.09 7.89
200,000 5.70 6.72 7.21 7.79 8.52 9.48
250,000 6.49 7.66 8.22 8.88 9.71 10.82
300,000 7.19 8.50 9.12 9.85 10.78 12.02
400,000 8.36 9.87 10.61 11.48 12.57 14.03
500,000 9.38 11.08 11.91 12.89 14.13 15.77
750,000 11.21 13.26 14.27 15.48 16.98 19.00
1,000,000 12.64 14.94 16.11 17.49 19.21 21.52
1 Projected ultimate costs include loss & ALAE only.

City of San Clemente
Liability Actuarial Study
7 The following is a summarized comparison of the projected ultimate loss costs excluding potential claims resulting from subsidence or earth movement.

City of San Clemente
Self-Insured General Liability Program – Excluding Earth Movement Claims Discounted Projected Ultimate Costs1 for 2023-24
($000s)
Marginally Recommended Range
Acceptable Low Target High Conservative
SIR Expected 70% CL 75% CL 80% CL 85% CL 90% CL
$100,000 $550 $651 $700 $757 $829 $925
150,000 820 968 1,040 1,123 1,228 1,369
200,000 982 1,161 1,246 1,348 1,475 1,644
250,000 1,118 1,323 1,421 1,537 1,683 1,878
300,000 1,238 1,465 1,575 1,705 1,867 2,085
400,000 1,440 1,705 1,835 1,987 2,179 2,435
500,000 1,616 1,915 2,060 2,235 2,451 2,742
750,000 1,931 2,288 2,468 2,680 2,947 3,304
1,000,000 2,178 2,581 2,786 3,030 3,335 3,742
City of San Clemente
Self-Insured General Liability Program – Excluding Earth Movement Claims Discounted Rates per $100 of Payroll for 2023-24
Marginally Recommended Range
Acceptable Low Target High Conservative
SIR Expected 70% CL 75% CL 80% CL 85% CL 90% CL
$100,000 $2.90 $3.44 $3.69 $3.99 $4.37 $4.88
150,000 4.33 5.11 5.49 5.93 6.48 7.22
200,000 5.18 6.13 6.57 7.11 7.78 8.67
250,000 5.90 6.98 7.50 8.11 8.88 9.91
300,000 6.53 7.73 8.31 9.00 9.85 11.00
400,000 7.60 9.00 9.68 10.48 11.50 12.85
500,000 8.53 10.10 10.87 11.79 12.93 14.47
750,000 10.19 12.07 13.02 14.14 15.55 17.43
1,000,000 11.49 13.62 14.70 15.99 17.60 19.75
1 Projected ultimate costs include loss & ALAE only.

City of San Clemente
Liability Actuarial Study
8 Loss Rate Trend
We have evaluated the trend in the City’s projected ultimate loss & ALAE rate. This rate equals projected ultimate loss and ALAE (limited to either $100,000 per occurrence or $250,000) divided by payroll in $100s, as displayed in the following graph.

Loss & ALAE Rate Trend1
Ultimate Loss & ALAE / Payroll ($100s)
1 Losses are at expected (no risk margin) and are not discounted to reflect net present value.

1.766

1.132

4.682

1.709 1.679

0.932

1.358

2.161

4.131

3.476

3.207 3.314

0.000

1.000

2.000

3.000

4.000

5.000

6.000

7.000

8.000

9.000

10.000
13 14 15 16 17 18 19 20 21 22 23 24
Loss & ALAE Rate
Year of Incident (Fiscal Year End)
Limited to $100,000 Limited to $250,000
City of San Clemente
Liability Actuarial Study
9 Average Claim Size (Severity) Trend
We have evaluated the trend in the City’s projected ultimate claim size (or “severity”). The ultimate claim size equals projected ultimate loss & ALAE (limited to either $100,000 per occurrence or the SIR) divided by the projected ultimate number of reported claims, as displayed in the following graph.

Average Claim Size Trend1
Ultimate Loss & ALAE / Ultimate Reported Claims
1 Losses are at expected (no risk margin) and are not discounted to reflect net present value. 6,800
3,900
22,300
7,600 7,700
4,300 5,000
12,200
21,400
14,900 15,600 16,700
0 5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
13 14 15 16 17 18 19 20 21 22 23 24
Average Claim Size ("Severity")
Year of Incident (Fiscal Year End)
Limited to $100,000 Limited to $250,000
City of San Clemente
Liability Actuarial Study
10 Claim Frequency Trend
We have evaluated the trend in the City’s claim frequency. The claim frequency equals projected ultimate number of reported claims divided by payroll in $ millions, as displayed in the following graph.

Claim Frequency Trend
Ultimate Reported Claims / Payroll ($ Millions)

2.587

2.876

2.103

2.241 2.168 2.170

2.731

1.775

1.932

2.328

2.055 1.985

0.000

0.500

1.000

1.500

2.000

2.500

3.000

3.500
13 14 15 16 17 18 19 20 21 22 23 24
Claim Frequency
Year of Incident (Fiscal Year End)
City of San Clemente
Liability Actuarial Study
11 Losses by Component
The following graphs illustrate our selected ultimate loss and ALAE amount for each accident year, assuming an SIR of $250,000 per occurrence, and segregates each ultimate into its component parts of (1) amounts already paid, (2) amounts already reserved for individual claims, and (3) IBNR reserves to cover both unreported claims as well as any adverse development on known claims.

Ultimate Loss & ALAE by Component
As of December 31, 2022
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Year of Incident (Fiscal Year End)
Paid Case IBNR
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Year of Incident (Fiscal Year End)
Paid Case IBNR
City of San Clemente
Liability Actuarial Study
12 Losses by Layer
The following graph shows the incurred losses by layer as of the valuation date of December 31, 2022.

Incurred Loss & ALAE by Layer
As of December 31, 2022

0 500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
13 14 15 16 17 18 19 20 21 22 23
Incurred Loss & ALAE
Year of Incident (Fiscal Year End)
0 to 100K 100K to 250K 250K to 500K 500K to 1M 1M to Unlimited City of San Clemente
Liability Actuarial Study
13 METHODOLOGY
The methodology that we have used to estimate ultimate Loss & LAE funding levels is in accordance with standard actuarial principles. The 5-step process described below outlines the methods used to calculate the liabilities.

1. Estimate Ultimate Loss & ALAE: The ultimate value of losses associated with a given policy year is usually not known until many years after the policy year has expired.

One estimate of future payments for a given policy year is the case reserve. However, to accurately project future payments for a given policy year, we also calculate indicated IBNR reserves that consider the following three factors:
x The amount that case reserves are redundant or deficient. x Losses that occurred during the policy period but have not yet been reported.

This is called “Pure IBNR”.
x Future payments on claims which are closed but will reopen in the future.

Separate ultimate loss & ALAE projections are developed for costs limited to $100,000 and limited to the retention. Loss development factors are primarily based on the City’s own historical experience supplemented with industry data. The following methods are used to estimate ultimate loss & ALAE:
x Reported Loss Development: Includes paid losses and case reserves. x Paid Loss Development: Based on payments only.
x Reported Exposure Method: This calculates IBNR based on expected ultimate loss times an IBNR factor. For the first layer of losses, the expected ultimate loss is based on exposure times initial loss rates. These loss rates are based on historical losses in that layer developed to ultimate using loss development factors. The loss rates in the higher layer incorporate increased limits factors based on the City’s historical losses and industry data. Where appropriate, historical data is adjusted for both claims and exposure trend, to reflect issues such as inflation, benefit level changes, and legal changes. x Paid Exposure Method: This calculates unpaid costs based on expected ultimate loss times an unpaid factor. The loss rates are identical to those utilized in the reported exposure method.
x Frequency x Severity: This calculates ultimate costs based on expected ultimate severity and expected ultimate frequency derived from historical experience.

City of San Clemente
Liability Actuarial Study
14 2. Select Ultimate Loss & ALAE: Based on the indicated ultimate loss and ALAE from the various methods described previously, the ultimate losses by year are selected.

3. Discounting/Net Present Value: Since payments associated with claims liabilities will be spread out over several years, they are discounted to reflect anticipated investment income on the assets set aside to pay these costs. The expected Loss & ALAE payout pattern is based on the paid loss development factors previously described.

4. Claims Administration: Liabilities associated with claims administration expenses are not considered in this analysis.

5. Confidence Levels: The “expected” estimate of unpaid Loss & ALAE is our best estimate given current information. However, there is uncertainty inherent in the claims settlement process. This uncertainty is quantified via confidence levels. For example, we believe that future payments have a 75% chance of being less than the liabilities at the 75% confidence level and have only a 25% chance of exceeding the 75% confidence level estimates. The confidence levels are based on the Heckman Meyers approach.

City of San Clemente
Liability Actuarial Study
15 CONSIDERATIONS AND KEY ASSUMPTIONS
Several considerations should be taken into account when evaluating property/casualty claim liabilities and funding projections for upcoming years. The following is a list of issues that we have considered in this report, along with some key assumptions that we have made.

Data
Data Quality: Our analysis is based on loss experience, exposure data, and other general and specific information provided to us by or on behalf of the City. While we have not independently audited or verified this information, we have reviewed it for reasonability and internal consistency. We have assumed that the data is accurate and complete. Any material inaccuracy or omission could invalidate the conclusions in this report and should be brought to our attention immediately.

Exposure: The exposure base utilized in this study is payroll, which was provided to us by the City. A list of exposure by year can be found in Appendix K.

Claims: The claims data utilized in this study was provided to us by the City.

Key Dates
Accounting Date: This study presents liabilities as of an accounting date of June 30, 2023.

Valuation Date: The data underlying this study are valued as of December 31, 2022.

Review Date: We have not reflected any actual claims activity subsequent to the valuation date.

Accounting Standard
The accounting standards applicable to this analysis follow the guidance promulgated by the Governmental Accounting Standards Board (GASB).

City of San Clemente
Liability Actuarial Study
16 Other Actuarial Considerations
Discounting to Reflect Net Present Value: Reserves in this report are presented on both undiscounted and discounted bases. At the City’s instruction, we have assumed that assets held for investment will generate an average annual rate of return of 2.0% over the time during which the loss liabilities are paid out. It should be noted that actual future investment returns may vary significantly from this assumption, depending upon prevailing investment market conditions.

Uncertainty & Risk Margin: There is uncertainty regarding the ultimate cost of the reserves and funding amounts that are estimated in this report. Our estimates are presented both at the expected level (also known as the actuarial central estimate) and at higher confidence levels. The projections at higher confidence levels reflect uncertainty by including a risk margin for the potential of costs coming in higher than at the expected level.

Trending: We have adjusted historical payroll and claims costs to reflect inflation as well as other changes in the claims environment. The payroll, claim frequency, and claim cost trend factors by year are in Appendices K and E, respectively. Benefit level changes are based on estimates from the California Liability Rating Bureau (WCIRB). We have also projected payroll and claim costs to account for future changes in cost levels.

External Influences: This analysis contemplates a continuation of current social, economic, judicial, and legislative trends. Historical changes have been reflected through the use of trend factors.

Homogeneity: The accuracy of loss estimates may be improved by subdividing loss experience into groups exhibiting similar characteristics. In evaluating the City’s loss experience, we considered all of the experience together.

Credibility: Credibility is a measure of the predictive value attached to a body of data. The degree to which consideration is given to homogeneity is related to the consideration of credibility. While making more homogeneous groupings may increase the credibility of the data, partitioning into cells too small to be reliable statistically may also decrease it. As discussed above, further subdivision of data (by individual department, for instance) would reduce the statistical credibility too greatly. This aggregation of data assumes that there has been a relatively stable distribution of exposures among various risk characteristics during the years included in this analysis.

Loss Development: The rate at which costs develop to their ultimate level was included in the calculation of loss development factors. The loss development factors are described in the Methodology section of this report.

Claim Emergence Patterns: The delay between the occurrence of claims and the recording of claims was considered in the estimation of loss development factors.

City of San Clemente
Liability Actuarial Study
17 Claim Settlement Patterns: The rate at which claims are closed and the impact upon incurred losses are considered in the calculation of loss development factors.

Reopened Claim Potential: The effect of reopened claims is included in the calculation of loss development factors.

Claim Frequency and Average Claim Size: The average and potential claim frequency and average claim size have been measured and considered in the liability estimates.

Large Losses & Catastrophes: The impact of large losses and catastrophes have the potential to distort the results of actuarial analyses. We have mitigated this risk by separating loss development and loss rates into the lower layer (limited to $100,000 per occurrence) and the excess layer. In addition, our net liability and funding estimates limit loss & ALAE to the appropriate SIR. Lastly, we have utilized industry size of loss curves and increased limits factors where we feel that the City’s experience is not fully credible.

Loss Limitations: Our projections of claim costs are limited to the City’s SIR. We have assumed that all relevant reinsurance purchased by the City for costs above the SIR is collectible. The retentions used in the study are displayed by year in the Background section of this report.

Recoveries: The data underlying this report are net of salvage, subrogation and other recoveries.

Portfolio Transfers, Commutations, and Structured Settlements: No historical loss portfolio transfers or commutations have been reflected in this analysis. To the extent there are structured settlements, they have been reflected in the claims data utilized in this analysis.

Operational Changes: This analysis has not made special adjustment for any specific operational changes at the City.

Reasonableness: We have established the reasonability of our results by utilizing standard actuarial techniques and reasonable assumptions.

Claims Administration Costs (Unallocated Loss Adjustment Expense or ULAE): ULAE costs have been
x excluded in our estimate of outstanding liabilities, and x excluded in our estimate of funding amounts for future program years.

Other Program Costs: Our estimate of the funding amounts for future program years x excludes contributions for excess insurance to cover claims or portions of claims that fall outside the program, and
x excludes costs for loss control, overhead, and other expenses associated with the program.

City of San Clemente
Liability Actuarial Study
18 CONDITIONS AND LIMITATIONS
It is important to recognize that the projections in this report are estimates at one point in time and are subject to future changes. Since the emergence and settlement of claims are subject to uncertainty, actual developments likely will vary, perhaps significantly, from the amounts carried in this report. No warranty is expressed or implied that such variance will not occur. The accuracy of the conclusions in this report depends on many factors, including the following:

Loss Activity since the Evaluation Date: The losses in this study were valued as of December 31, 2022. It is possible that there has been significant loss activity that has occurred since that date which would change the findings of this report.

Data Accuracy: This report relies on unaudited loss and exposure information provided by the City. The accuracy of our projections relies on the accuracy of this data.

Loss Development: The appropriateness of the City’s historical and industry loss development patterns in projecting future loss development.

Trend Changes: The appropriateness of the trend indices used to adjust historical losses.

Discounting/Net Present Value: Our estimates that are discounted to reflect net present value assume a certain investment return on assets. This adjustment to reflect net present value is inaccurate to the extent that actual investment returns deviate from the assumed returns.

Insurance: Our estimates assume that all excess insurance is valid and collectible.

Further, our funding recommendations do not include a provision for losses greater than the City’s excess coverage.

Future Law Changes: We cannot predict, nor have we attempted to predict, the impact of future law changes and court rulings on claims costs.

New Classes of Claims: Our projections make no provision for the extraordinary future emergence of new classes of loss or types of loss not sufficiently represented in the City’s historical data, or which are not yet quantifiable.

City of San Clemente
Liability Actuarial Study
19 DISTRIBUTION AND USE
This report was prepared for the sole use of the City of San Clemente and its auditors.

This report is neither intended nor necessarily suitable for any other use. It may be forwarded to regulatory authorities as required by law. Any other distribution of this report requires the express written consent of Bickmore Actuarial. If such consent is granted, the report should be forwarded in its entirety, including all exhibits and appendices. It should also be understood that Bickmore Actuarial would be available to answer any questions regarding this report and its conclusions.

City of San Clemente
Liability Actuarial Study
20 GLOSSARY OF ACTUARIAL TERMS
Accident Year – Year during which the accidents that generate a group of claims occurs, regardless of when the claims are reported, payments are made, or reserves are established.

Allocated Loss Adjustment Expenses (ALAE) – Expense incurred in settling claims that can be directly attributed to specific individual claims (e.g., legal fees, investigative fees, court charges, utilization review, bill review, etc.) Benefit Level Factor – Factor used to adjust historical losses to the current level of liability benefits.

Case Reserve – The amount left to be paid on an open claim, as estimated by the claims administrator.

Claim Count Development Factor – A factor that is applied to the number of claims reported in a particular accident period in order to estimate the number of claims that will ultimately be reported.

Claim Frequency – Number of claims per $1 million of payroll.

Confidence Level – An estimated probability that a given level of funding will be adequate to pay actual claims costs. For example, the 85% confidence level refers to an estimate for which there is an 85% chance that the amount will be sufficient to pay loss costs.

Discount Factor – A factor to adjust estimated loss costs to reflect net present value.

Expected Losses – The best estimate of the full, ultimate value of losses.

Exposure Base – An objective and easily measurable quantity that is correlated with loss. Commonly used exposure bases include payroll, population, revenue, number of employees (FTE), average daily attendance (ADA), number of vehicles and total insured value (TIV).

Incurred but not Reported (IBNR) Losses – This is the ultimate value of losses less any amount that has been paid to date or set up as a case reserve by the claims adjuster.

It includes amounts for claims incurred but not yet received by the administrator as well as loss development on already reported claims.

Loss Adjustment Expense – The sum of Allocated Loss Adjustment Expense (ALAE) and Unallocated Loss Adjustment Expense (ULAE).

City of San Clemente
Liability Actuarial Study
21 Loss Development Factor – A factor applied to losses for a particular accident period to reflect the fact that reported and paid losses do not reflect final values until all claims are settled. See the Methodology section.

Loss Rate – Ultimate losses per $100 of payroll.

Non-Claims Related Expenses – Program expenses not directly associated with claims settlement and administration, such as excess insurance, safety program expenses, and general overhead. These exclude expenses associated with loss settlements (Indemnity/Medical, BI/PD), legal expenses associated with individual claims (ALAE), and claims administration (ULAE).

Outstanding Losses – Losses that have been incurred but not paid. This is the ultimate value of losses less any amount that has been paid.

Paid Losses – Losses actually paid on all reported claims.

Program Losses – Losses, including ALAE, limited to the SIR for each occurrence.

Reported Losses – The total expected value of losses as estimated by the claims administrator. This is the sum of paid losses and case reserves.

Self-Insured Retention (SIR) – The level at which an excess insurance policy is triggered to begin payments on a claim. Financially, this is similar to an insurance deductible.

Severity – Average claim cost.

Ultimate Losses – The value of claim costs at the time when all claims have been settled.

This amount must be estimated until all claims are actually settled.

Unallocated Loss Adjustment Expenses (ULAE) – Claim settlement expenses that cannot be directly attributed to individual claims (e.g., claims administration expenses, taxes, etc.)

City of San Clemente
Liability Actuarial Study
22 EXHIBITS AND APPENDICES
Exhibit 1
Page 
City of San Clemente - Liability
Funding Options for Program Year 2022-2023 (SIR = $100,000) Dollar Payroll
Amount Rate
(A) Estimated Ultimate Losses Incurred in
Accident Year 2022-2023: $572,000 $3.094
(Based on Exhibit 4, Page 1, (K))
(B) Estimated Claims Administration Fees
Incurred in Accident Year 2022-2023: 0 0.000
(From Exhibit 4, Page 1, (L))
(C) Total Claims Costs
Incurred in Accident Year 2022-2023: $572,000 $3.094
((A) + (B))
(D) Loss Discount Factor (Based on a Discount Rate of 2.00%.): 0.964 (Based on Appendix G, Page 2, (G))
(E) Discounted Total Claims Costs
Incurred in Accident Year 2022-2023: $551,000 $2.980
((C) x (D))
Marginally
Acceptable Recommended Conservative
70% 75% 80% 85% 90%
(F) Confidence Level Factor:
(Based on Appendix H) 1.181 1.268 1.370 1.497 1.668
(G) Margin for Adverse Experience: 100,000 148,000 204,000 274,000 368,000 ((E) x [(F) - 1])
(H) Recommended Funding in 2022-2023
for Claims Costs and Other Expenses: $651,000 $699,000 $755,000 $825,000 $919,000 ((E) + (G))
(I) Rate per $100 of Payroll: $3.521 $3.781 $4.083 $4.462 $4.970 ((H) / $184,893)
Payroll rates are per hundred dollars of 2022-2023 payroll of $18,489,300. 23 Exhibit 1
Page 
City of San Clemente - Liability
Funding Options for Program Year 2023-2024 (SIR = $100,000) Dollar Payroll
Amount Rate
(A) Estimated Ultimate Losses Incurred in
Accident Year 2023-2024: $629,000 $3.319
(Based on Exhibit 4, Page 1, (K))
(B) Estimated Claims Administration Fees
Incurred in Accident Year 2023-2024: 0 0.000
(From Exhibit 4, Page 1, (L))
(C) Total Claims Costs
Incurred in Accident Year 2023-2024: $629,000 $3.319
((A) + (B))
(D) Loss Discount Factor (Based on a Discount Rate of 2.00%.): 0.964 (Based on Appendix G, Page 2, (G))
(E) Discounted Total Claims Costs
Incurred in Accident Year 2023-2024: $606,000 $3.198
((C) x (D))
Marginally
Acceptable Recommended Conservative
70% 75% 80% 85% 90%
(F) Confidence Level Factor:
(Based on Appendix H) 1.181 1.268 1.370 1.497 1.668
(G) Margin for Adverse Experience: 110,000 162,000 224,000 301,000 405,000 ((E) x [(F) - 1])
(H) Recommended Funding in 2023-2024
for Claims Costs and Other Expenses: $716,000 $768,000 $830,000 $907,000 $1,011,000 ((E) + (G))
(I) Rate per $100 of Payroll: $3.778 $4.052 $4.380 $4.786 $5.335 ((H) / $189,515)
Payroll rates are per hundred dollars of 2023-2024 payroll of $18,951,500. 24 Exhibit 1
Page 
City of San Clemente - Liability
Funding Options for Program Year 2022-2023 (SIR = $150,000) Dollar Payroll
Amount Rate
(A) Estimated Ultimate Losses Incurred in
Accident Year 2022-2023: $843,000 $4.559
(Based on Exhibit 4, Page 1, (K))
(B) Estimated Claims Administration Fees
Incurred in Accident Year 2022-2023: 0 0.000
(From Exhibit 4, Page 1, (L))
(C) Total Claims Costs
Incurred in Accident Year 2022-2023: $843,000 $4.559
((A) + (B))
(D) Loss Discount Factor (Based on a Discount Rate of 2.00%.): 0.955 (Based on Appendix G, Page 2, (G))
(E) Discounted Total Claims Costs
Incurred in Accident Year 2022-2023: $805,000 $4.354
((C) x (D))
Marginally
Acceptable Recommended Conservative
70% 75% 80% 85% 90%
(F) Confidence Level Factor:
(Based on Appendix H) 1.179 1.264 1.364 1.490 1.657
(G) Margin for Adverse Experience: 144,000 213,000 293,000 394,000 529,000 ((E) x [(F) - 1])
(H) Recommended Funding in 2022-2023
for Claims Costs and Other Expenses: $949,000 $1,018,000 $1,098,000 $1,199,000 $1,334,000 ((E) + (G))
(I) Rate per $100 of Payroll: $5.133 $5.506 $5.939 $6.485 $7.215 ((H) / $184,893)
Payroll rates are per hundred dollars of 2022-2023 payroll of $18,489,300. 25 Exhibit 1
Page 
City of San Clemente - Liability
Funding Options for Program Year 2023-2024 (SIR = $150,000) Dollar Payroll
Amount Rate
(A) Estimated Ultimate Losses Incurred in
Accident Year 2023-2024: $944,000 $4.981
(Based on Exhibit 4, Page 1, (K))
(B) Estimated Claims Administration Fees
Incurred in Accident Year 2023-2024: 0 0.000
(From Exhibit 4, Page 1, (L))
(C) Total Claims Costs
Incurred in Accident Year 2023-2024: $944,000 $4.981
((A) + (B))
(D) Loss Discount Factor (Based on a Discount Rate of 2.00%.): 0.955 (Based on Appendix G, Page 2, (G))
(E) Discounted Total Claims Costs
Incurred in Accident Year 2023-2024: $902,000 $4.760
((C) x (D))
Marginally
Acceptable Recommended Conservative
70% 75% 80% 85% 90%
(F) Confidence Level Factor:
(Based on Appendix H) 1.179 1.264 1.364 1.490 1.657
(G) Margin for Adverse Experience: 161,000 238,000 328,000 442,000 593,000 ((E) x [(F) - 1])
(H) Recommended Funding in 2023-2024
for Claims Costs and Other Expenses: $1,063,000 $1,140,000 $1,230,000 $1,344,000 $1,495,000 ((E) + (G))
(I) Rate per $100 of Payroll: $5.609 $6.015 $6.490 $7.092 $7.889 ((H) / $189,515)
Payroll rates are per hundred dollars of 2023-2024 payroll of $18,951,500. 26 Exhibit 1
Page 
City of San Clemente - Liability
Funding Options for Program Year 2022-2023 (SIR = $200,000) Dollar Payroll
Amount Rate
(A) Estimated Ultimate Losses Incurred in
Accident Year 2022-2023: $1,034,000 $5.592
(Based on Exhibit 4, Page 1, (K))
(B) Estimated Claims Administration Fees
Incurred in Accident Year 2022-2023: 0 0.000
(From Exhibit 4, Page 1, (L))
(C) Total Claims Costs
Incurred in Accident Year 2022-2023: $1,034,000 $5.592
((A) + (B))
(D) Loss Discount Factor (Based on a Discount Rate of 2.00%.): 0.952 (Based on Appendix G, Page 2, (G))
(E) Discounted Total Claims Costs
Incurred in Accident Year 2022-2023: $984,000 $5.322
((C) x (D))
Marginally
Acceptable Recommended Conservative
70% 75% 80% 85% 90%
(F) Confidence Level Factor:
(Based on Appendix H) 1.179 1.265 1.366 1.493 1.662
(G) Margin for Adverse Experience: 176,000 261,000 360,000 485,000 651,000 ((E) x [(F) - 1])
(H) Recommended Funding in 2022-2023
for Claims Costs and Other Expenses: $1,160,000 $1,245,000 $1,344,000 $1,469,000 $1,635,000 ((E) + (G))
(I) Rate per $100 of Payroll: $6.274 $6.734 $7.269 $7.945 $8.843 ((H) / $184,893)
Payroll rates are per hundred dollars of 2022-2023 payroll of $18,489,300. 27 Exhibit 1
Page 
City of San Clemente - Liability
Funding Options for Program Year 2023-2024 (SIR = $200,000) Dollar Payroll
Amount Rate
(A) Estimated Ultimate Losses Incurred in
Accident Year 2023-2024: $1,136,000 $5.994
(Based on Exhibit 4, Page 1, (K))
(B) Estimated Claims Administration Fees
Incurred in Accident Year 2023-2024: 0 0.000
(From Exhibit 4, Page 1, (L))
(C) Total Claims Costs
Incurred in Accident Year 2023-2024: $1,136,000 $5.994
((A) + (B))
(D) Loss Discount Factor (Based on a Discount Rate of 2.00%.): 0.952 (Based on Appendix G, Page 2, (G))
(E) Discounted Total Claims Costs
Incurred in Accident Year 2023-2024: $1,081,000 $5.704
((C) x (D))
Marginally
Acceptable Recommended Conservative
70% 75% 80% 85% 90%
(F) Confidence Level Factor:
(Based on Appendix H) 1.179 1.265 1.366 1.493 1.662
(G) Margin for Adverse Experience: 193,000 286,000 396,000 533,000 716,000 ((E) x [(F) - 1])
(H) Recommended Funding in 2023-2024
for Claims Costs and Other Expenses: $1,274,000 $1,367,000 $1,477,000 $1,614,000 $1,797,000 ((E) + (G))
(I) Rate per $100 of Payroll: $6.722 $7.213 $7.794 $8.516 $9.482 ((H) / $189,515)
Payroll rates are per hundred dollars of 2023-2024 payroll of $18,951,500. 28 Exhibit 1
Page 
City of San Clemente - Liability
Funding Options for Program Year 2022-2023 (SIR = $250,000) Dollar Payroll
Amount Rate
(A) Estimated Ultimate Losses Incurred in
Accident Year 2022-2023: $1,173,000 $6.344
(From Appendix F)
(B) Estimated Claims Administration Fees
Incurred in Accident Year 2022-2023: 0 0.000
(From Exhibit 4, Page 1, (L))
(C) Total Claims Costs
Incurred in Accident Year 2022-2023: $1,173,000 $6.344
((A) + (B))
(D) Loss Discount Factor (Based on a Discount Rate of 2.00%.): 0.950 (Appendix G, Page 2, (G))
(E) Discounted Total Claims Costs
Incurred in Accident Year 2022-2023: $1,115,000 $6.031
((C) x (D))
Marginally
Acceptable Recommended Conservative
70% 75% 80% 85% 90%
(F) Confidence Level Factor:
(From Appendix H) 1.180 1.266 1.368 1.496 1.667
(G) Margin for Adverse Experience: 201,000 297,000 410,000 553,000 744,000 ((E) x [(F) - 1])
(H) Recommended Funding in 2022-2023
for Claims Costs and Other Expenses: $1,316,000 $1,412,000 $1,525,000 $1,668,000 $1,859,000 ((E) + (G))
(I) Rate per $100 of Payroll: $7.118 $7.637 $8.248 $9.021 $10.054 ((H) / $184,893)
Payroll rates are per hundred dollars of 2022-2023 payroll of $18,489,300. 29 Exhibit 1
Page 
City of San Clemente - Liability
Funding Options for Program Year 2023-2024 (SIR = $250,000) Dollar Payroll
Amount Rate
(A) Estimated Ultimate Losses Incurred in
Accident Year 2023-2024: $1,294,000 $6.828
(From Appendix F)
(B) Estimated Claims Administration Fees
Incurred in Accident Year 2023-2024: 0 0.000
(From Exhibit 4, Page 1, (L))
(C) Total Claims Costs
Incurred in Accident Year 2023-2024: $1,294,000 $6.828
((A) + (B))
(D) Loss Discount Factor (Based on a Discount Rate of 2.00%.): 0.950 (Appendix G, Page 2, (G))
(E) Discounted Total Claims Costs
Incurred in Accident Year 2023-2024: $1,230,000 $6.490
((C) x (D))
Marginally
Acceptable Recommended Conservative
70% 75% 80% 85% 90%
(F) Confidence Level Factor:
(From Appendix H) 1.180 1.266 1.368 1.496 1.667
(G) Margin for Adverse Experience: 221,000 327,000 453,000 610,000 820,000 ((E) x [(F) - 1])
(H) Recommended Funding in 2023-2024
for Claims Costs and Other Expenses: $1,451,000 $1,557,000 $1,683,000 $1,840,000 $2,050,000 ((E) + (G))
(I) Rate per $100 of Payroll: $7.656 $8.216 $8.881 $9.709 $10.817 ((H) / $189,515)
Payroll rates are per hundred dollars of 2023-2024 payroll of $18,951,500. 30 Exhibit 1
Page

City of San Clemente - Liability
Funding Options for Program Year 2022-2023 (SIR = $300,000) Dollar Payroll
Amount Rate
(A) Estimated Ultimate Losses Incurred in
Accident Year 2022-2023: $1,287,000 $6.961
(Based on Exhibit 4, Page 1, (K))
(B) Estimated Claims Administration Fees
Incurred in Accident Year 2022-2023: 0 0.000
(From Exhibit 4, Page 1, (L))
(C) Total Claims Costs
Incurred in Accident Year 2022-2023: $1,287,000 $6.961
((A) + (B))
(D) Loss Discount Factor (Based on a Discount Rate of 2.00%.): 0.949 (Based on Appendix G, Page 2, (G))
(E) Discounted Total Claims Costs
Incurred in Accident Year 2022-2023: $1,221,000 $6.604
((C) x (D))
Marginally
Acceptable Recommended Conservative
70% 75% 80% 85% 90%
(F) Confidence Level Factor:
(Based on Appendix H) 1.181 1.268 1.370 1.499 1.671
(G) Margin for Adverse Experience: 221,000 327,000 452,000 609,000 819,000 ((E) x [(F) - 1])
(H) Recommended Funding in 2022-2023
for Claims Costs and Other Expenses: $1,442,000 $1,548,000 $1,673,000 $1,830,000 $2,040,000 ((E) + (G))
(I) Rate per $100 of Payroll: $7.799 $8.372 $9.048 $9.898 $11.033 ((H) / $184,893)
Payroll rates are per hundred dollars of 2022-2023 payroll of $18,489,300. 31 Exhibit 1
Page 
City of San Clemente - Liability
Funding Options for Program Year 2023-2024 (SIR = $300,000) Dollar Payroll
Amount Rate
(A) Estimated Ultimate Losses Incurred in
Accident Year 2023-2024: $1,436,000 $7.577
(Based on Exhibit 4, Page 1, (K))
(B) Estimated Claims Administration Fees
Incurred in Accident Year 2023-2024: 0 0.000
(From Exhibit 4, Page 1, (L))
(C) Total Claims Costs
Incurred in Accident Year 2023-2024: $1,436,000 $7.577
((A) + (B))
(D) Loss Discount Factor (Based on a Discount Rate of 2.00%.): 0.949 (Based on Appendix G, Page 2, (G))
(E) Discounted Total Claims Costs
Incurred in Accident Year 2023-2024: $1,363,000 $7.192
((C) x (D))
Marginally
Acceptable Recommended Conservative
70% 75% 80% 85% 90%
(F) Confidence Level Factor:
(Based on Appendix H) 1.181 1.268 1.370 1.499 1.671
(G) Margin for Adverse Experience: 247,000 365,000 504,000 680,000 915,000 ((E) x [(F) - 1])
(H) Recommended Funding in 2023-2024
for Claims Costs and Other Expenses: $1,610,000 $1,728,000 $1,867,000 $2,043,000 $2,278,000 ((E) + (G))
(I) Rate per $100 of Payroll: $8.495 $9.118 $9.851 $10.780 $12.020 ((H) / $189,515)
Payroll rates are per hundred dollars of 2023-2024 payroll of $18,951,500. 32 Exhibit 1
Page 
City of San Clemente - Liability
Funding Options for Program Year 2022-2023 (SIR = $400,000) Dollar Payroll
Amount Rate
(A) Estimated Ultimate Losses Incurred in
Accident Year 2022-2023: $1,466,000 $7.929
(Based on Exhibit 4, Page 1, (K))
(B) Estimated Claims Administration Fees
Incurred in Accident Year 2022-2023: 0 0.000
(From Exhibit 4, Page 1, (L))
(C) Total Claims Costs
Incurred in Accident Year 2022-2023: $1,466,000 $7.929
((A) + (B))
(D) Loss Discount Factor (Based on a Discount Rate of 2.00%.): 0.947 (Based on Appendix G, Page 2, (G))
(E) Discounted Total Claims Costs
Incurred in Accident Year 2022-2023: $1,389,000 $7.512
((C) x (D))
Marginally
Acceptable Recommended Conservative
70% 75% 80% 85% 90%
(F) Confidence Level Factor:
(Based on Appendix H) 1.181 1.269 1.373 1.504 1.678
(G) Margin for Adverse Experience: 251,000 374,000 518,000 700,000 942,000 ((E) x [(F) - 1])
(H) Recommended Funding in 2022-2023
for Claims Costs and Other Expenses: $1,640,000 $1,763,000 $1,907,000 $2,089,000 $2,331,000 ((E) + (G))
(I) Rate per $100 of Payroll: $8.870 $9.535 $10.314 $11.298 $12.607 ((H) / $184,893)
Payroll rates are per hundred dollars of 2022-2023 payroll of $18,489,300. 33 Exhibit 1

City of San Clemente - Liability
Funding Options for Program Year 2023-2024 (SIR = $400,000) Dollar Payroll
Amount Rate
(A) Estimated Ultimate Losses Incurred in
Accident Year 2023-2024: $1,672,000 $8.823
(Based on Exhibit 4, Page 1, (K))
(B) Estimated Claims Administration Fees
Incurred in Accident Year 2023-2024: 0 0.000
(From Exhibit 4, Page 1, (L))
(C) Total Claims Costs
Incurred in Accident Year 2023-2024: $1,672,000 $8.823
((A) + (B))
(D) Loss Discount Factor (Based on a Discount Rate of 2.00%.): 0.947 (Based on Appendix G, Page 2, (G))
(E) Discounted Total Claims Costs
Incurred in Accident Year 2023-2024: $1,584,000 $8.358
((C) x (D))
Marginally
Acceptable Recommended Conservative
70% 75% 80% 85% 90%
(F) Confidence Level Factor:
(Based on Appendix H) 1.181 1.269 1.373 1.504 1.678
(G) Margin for Adverse Experience: 287,000 426,000 591,000 798,000 1,074,000 ((E) x [(F) - 1])
(H) Recommended Funding in 2023-2024
for Claims Costs and Other Expenses: $1,871,000 $2,010,000 $2,175,000 $2,382,000 $2,658,000 ((E) + (G))
(I) Rate per $100 of Payroll: $9.873 $10.606 $11.477 $12.569 $14.025 ((H) / $189,515)
Payroll rates are per hundred dollars of 2023-2024 payroll of $18,951,500. 34 Exhibit 1
Page 
City of San Clemente - Liability
Funding Options for Program Year 2022-2023 (SIR = $500,000) Dollar Payroll
Amount Rate
(A) Estimated Ultimate Losses Incurred in
Accident Year 2022-2023: $1,596,000 $8.632
(Based on Exhibit 4, Page 1, (K))
(B) Estimated Claims Administration Fees
Incurred in Accident Year 2022-2023: 0 0.000
(From Exhibit 4, Page 1, (L))
(C) Total Claims Costs
Incurred in Accident Year 2022-2023: $1,596,000 $8.632
((A) + (B))
(D) Loss Discount Factor (Based on a Discount Rate of 2.00%.): 0.946 (Based on Appendix G, Page 2, (G))
(E) Discounted Total Claims Costs
Incurred in Accident Year 2022-2023: $1,510,000 $8.167
((C) x (D))
Marginally
Acceptable Recommended Conservative
70% 75% 80% 85% 90%
(F) Confidence Level Factor:
(Based on Appendix H) 1.182 1.270 1.375 1.507 1.682
(G) Margin for Adverse Experience: 275,000 408,000 566,000 766,000 1,030,000 ((E) x [(F) - 1])
(H) Recommended Funding in 2022-2023
for Claims Costs and Other Expenses: $1,785,000 $1,918,000 $2,076,000 $2,276,000 $2,540,000 ((E) + (G))
(I) Rate per $100 of Payroll: $9.654 $10.374 $11.228 $12.310 $13.738 ((H) / $184,893)
Payroll rates are per hundred dollars of 2022-2023 payroll of $18,489,300. 35 Exhibit 1
Page 
City of San Clemente - Liability
Funding Options for Program Year 2023-2024 (SIR = $500,000) Dollar Payroll
Amount Rate
(A) Estimated Ultimate Losses Incurred in
Accident Year 2023-2024: $1,878,000 $9.910
(Based on Exhibit 4, Page 1, (K))
(B) Estimated Claims Administration Fees
Incurred in Accident Year 2023-2024: 0 0.000
(From Exhibit 4, Page 1, (L))
(C) Total Claims Costs
Incurred in Accident Year 2023-2024: $1,878,000 $9.910
((A) + (B))
(D) Loss Discount Factor (Based on a Discount Rate of 2.00%.): 0.946 (Based on Appendix G, Page 2, (G))
(E) Discounted Total Claims Costs
Incurred in Accident Year 2023-2024: $1,777,000 $9.377
((C) x (D))
Marginally
Acceptable Recommended Conservative
70% 75% 80% 85% 90%
(F) Confidence Level Factor:
(Based on Appendix H) 1.182 1.270 1.375 1.507 1.682
(G) Margin for Adverse Experience: 323,000 480,000 666,000 901,000 1,212,000 ((E) x [(F) - 1])
(H) Recommended Funding in 2023-2024
for Claims Costs and Other Expenses: $2,100,000 $2,257,000 $2,443,000 $2,678,000 $2,989,000 ((E) + (G))
(I) Rate per $100 of Payroll: $11.081 $11.909 $12.891 $14.131 $15.772 ((H) / $189,515)
Payroll rates are per hundred dollars of 2023-2024 payroll of $18,951,500. 36 Exhibit 1
Page 
City of San Clemente - Liability
Funding Options for Program Year 2022-2023 (SIR = $750,000) Dollar Payroll
Amount Rate
(A) Estimated Ultimate Losses Incurred in
Accident Year 2022-2023: $1,782,000 $9.638
(Based on Exhibit 4, Page 1, (K))
(B) Estimated Claims Administration Fees
Incurred in Accident Year 2022-2023: 0 0.000
(From Exhibit 4, Page 1, (L))
(C) Total Claims Costs
Incurred in Accident Year 2022-2023: $1,782,000 $9.638
((A) + (B))
(D) Loss Discount Factor (Based on a Discount Rate of 2.00%.): 0.945 (Based on Appendix G, Page 2, (G))
(E) Discounted Total Claims Costs
Incurred in Accident Year 2022-2023: $1,684,000 $9.108
((C) x (D))
Marginally
Acceptable Recommended Conservative
70% 75% 80% 85% 90%
(F) Confidence Level Factor:
(Based on Appendix H) 1.183 1.273 1.381 1.515 1.695
(G) Margin for Adverse Experience: 308,000 460,000 642,000 867,000 1,170,000 ((E) x [(F) - 1])
(H) Recommended Funding in 2022-2023
for Claims Costs and Other Expenses: $1,992,000 $2,144,000 $2,326,000 $2,551,000 $2,854,000 ((E) + (G))
(I) Rate per $100 of Payroll: $10.774 $11.596 $12.580 $13.797 $15.436 ((H) / $184,893)
Payroll rates are per hundred dollars of 2022-2023 payroll of $18,489,300. 37 Exhibit 1
Page 
City of San Clemente - Liability
Funding Options for Program Year 2023-2024 (SIR = $750,000) Dollar Payroll
Amount Rate
(A) Estimated Ultimate Losses Incurred in
Accident Year 2023-2024: $2,248,000 $11.862
(Based on Exhibit 4, Page 1, (K))
(B) Estimated Claims Administration Fees
Incurred in Accident Year 2023-2024: 0 0.000
(From Exhibit 4, Page 1, (L))
(C) Total Claims Costs
Incurred in Accident Year 2023-2024: $2,248,000 $11.862 ((A) + (B))
(D) Loss Discount Factor (Based on a Discount Rate of 2.00%.): 0.945 (Based on Appendix G, Page 2, (G))
(E) Discounted Total Claims Costs
Incurred in Accident Year 2023-2024: $2,124,000 $11.208 ((C) x (D))
Marginally
Acceptable Recommended Conservative
70% 75% 80% 85% 90%
(F) Confidence Level Factor:
(Based on Appendix H) 1.183 1.273 1.381 1.515 1.695
(G) Margin for Adverse Experience: 389,000 580,000 809,000 1,094,000 1,476,000 ((E) x [(F) - 1])
(H) Recommended Funding in 2023-2024
for Claims Costs and Other Expenses: $2,513,000 $2,704,000 $2,933,000 $3,218,000 $3,600,000 ((E) + (G))
(I) Rate per $100 of Payroll: $13.260 $14.268 $15.476 $16.980 $18.996 ((H) / $189,515)
Payroll rates are per hundred dollars of 2023-2024 payroll of $18,951,500. 38 Exhibit 1
Page 
City of San Clemente - Liability
Funding Options for Program Year 2022-2023 (SIR = $1,000,000) Dollar Payroll
Amount Rate
(A) Estimated Ultimate Losses Incurred in
Accident Year 2022-2023: $1,932,000 $10.449
(Based on Exhibit 4, Page 1, (K))
(B) Estimated Claims Administration Fees
Incurred in Accident Year 2022-2023: 0 0.000
(From Exhibit 4, Page 1, (L))
(C) Total Claims Costs
Incurred in Accident Year 2022-2023: $1,932,000 $10.449 ((A) + (B))
(D) Loss Discount Factor (Based on a Discount Rate of 2.00%.): 0.944 (Based on Appendix G, Page 2, (G))
(E) Discounted Total Claims Costs
Incurred in Accident Year 2022-2023: $1,824,000 $9.865
((C) x (D))
Marginally
Acceptable Recommended Conservative
70% 75% 80% 85% 90%
(F) Confidence Level Factor:
(Based on Appendix H) 1.182 1.274 1.383 1.519 1.702
(G) Margin for Adverse Experience: 332,000 500,000 699,000 947,000 1,280,000 ((E) x [(F) - 1])
(H) Recommended Funding in 2022-2023
for Claims Costs and Other Expenses: $2,156,000 $2,324,000 $2,523,000 $2,771,000 $3,104,000 ((E) + (G))
(I) Rate per $100 of Payroll: $11.661 $12.569 $13.646 $14.987 $16.788 ((H) / $184,893)
Payroll rates are per hundred dollars of 2022-2023 payroll of $18,489,300. 39 Exhibit 1
Page 
City of San Clemente - Liability
Funding Options for Program Year 2023-2024 (SIR = $1,000,000) Dollar Payroll
Amount Rate
(A) Estimated Ultimate Losses Incurred in
Accident Year 2023-2024: $2,538,000 $13.392
(Based on Exhibit 4, Page 1, (K))
(B) Estimated Claims Administration Fees
Incurred in Accident Year 2023-2024: 0 0.000
(From Exhibit 4, Page 1, (L))
(C) Total Claims Costs
Incurred in Accident Year 2023-2024: $2,538,000 $13.392 ((A) + (B))
(D) Loss Discount Factor (Based on a Discount Rate of 2.00%.): 0.944 (Based on Appendix G, Page 2, (G))
(E) Discounted Total Claims Costs
Incurred in Accident Year 2023-2024: $2,396,000 $12.643 ((C) x (D))
Marginally
Acceptable Recommended Conservative
70% 75% 80% 85% 90%
(F) Confidence Level Factor:
(Based on Appendix H) 1.182 1.274 1.383 1.519 1.702
(G) Margin for Adverse Experience: 436,000 657,000 918,000 1,244,000 1,682,000 ((E) x [(F) - 1])
(H) Recommended Funding in 2023-2024
for Claims Costs and Other Expenses: $2,832,000 $3,053,000 $3,314,000 $3,640,000 $4,078,000 ((E) + (G))
(I) Rate per $100 of Payroll: $14.943 $16.110 $17.487 $19.207 $21.518 ((H) / $189,515)
Payroll rates are per hundred dollars of 2023-2024 payroll of $18,951,500. 40 Exhibit 2
City of San Clemente - Liability
IBNR as of 6/30/23 at Expected Claims Level
Estimated
Percent of
IBNR
Estimated Reported Estimated
Reported IBNR Between Estimated IBNR
Accident Estimated as of as of 1/1/23 and IBNR as of
Year Ultimate 12/31/22 12/31/22 6/30/23 Reported 6/30/23 (A) (B) (C) (D) (E) (F)
2005-2006 38,028 38,028 0 100.0% 0 0
2006-2007 738,196 738,196 0 100.0% 0 0
2007-2008 337,085 337,085 0 100.0% 0 0
2008-2009 1,361,721 1,361,721 0 100.0% 0 0
2009-2010 844,729 844,729 0 100.0% 0 0
2010-2011 572,478 572,478 0 100.0% 0 0
2011-2012 427,370 427,370 0 100.0% 0 0
2012-2013 572,990 572,990 0 100.0% 0 0
2013-2014 327,158 327,158 0 100.0% 0 0
2014-2015 1,427,034 1,427,034 0 100.0% 0 0
2015-2016 420,423 420,423 0 100.0% 0 0
2016-2017 440,266 440,266 0 66.6% 0 0
2017-2018 158,998 158,998 0 37.3% 0 0
2018-2019 548,608 548,608 0 36.0% 0 0
2019-2020 686,000 629,833 56,167 32.2% 18,000 38,167
2020-2021 1,576,000 1,421,309 154,691 29.9% 46,000 108,691 2021-2022 1,256,000 767,677 488,323 27.7% 135,000 353,323 2022-2023 1,173,000 54,491 532,509 22.8% 255,000 863,509 Totals $12,906,084 $11,088,394 $1,231,690 $454,000 $1,363,690 Notes:

$
From Exhibit 3, Page 1.

%
Provided by the City. These losses exclude amounts
incurred above  for each year.

&
(A) - (B).

'
Percentage of incurred but not reported (IBNR) expected to be reported between 1/1/23 and 6/30/23. The percentage is based on the development pattern selected in Appendix A.

(
((A) - (B)) x (D).

)
(A) - (B) - (E).

This exhibit shows the calculation of the amount of incurred but not reported losses we expect as of 6/30/23. This amount is dependent on both the strength of the case reserves and the average frequency and severity of the losses incurred.
41 Exhibit 3

City of San Clemente - Liability
Estimated Ultimate Program Losses
Selected
Exposure Exposure Estimate of
Reported Paid Method Method Selected Ultimate
Loss Loss Based on Based on Frequency- Estimate of Losses Accident Development Development Reported Paid Severity Ultimate Limited to Year Method Method Losses Losses Method Losses Aggregate (A) (B) (C) (D) (E) (F) (G)
2005-2006 38,028 38,028 38,028 38,028 62,123 38,028 38,028 2006-2007 738,196 738,196 738,196 738,196 614,075 738,196 738,196 2007-2008 337,085 337,085 337,085 337,085 314,500 337,085 337,085 2008-2009 1,361,721 1,361,721 1,361,721 1,361,721 1,298,757 1,361,721 1,361,721 2009-2010 844,729 844,729 844,729 844,729 897,501 844,729 844,729 2010-2011 572,478 572,478 572,478 572,478 477,652 572,478 572,478 2011-2012 427,370 427,370 427,370 427,370 594,983 427,370 427,370 2012-2013 572,990 572,990 572,990 572,990 490,840 572,990 572,990 2013-2014 327,158 328,139 327,158 328,127 322,785 327,158 327,158 2014-2015 1,427,034 1,437,023 1,427,034 1,436,525 1,355,970 1,427,034 1,427,034 2015-2016 420,423 426,309 420,423 427,409 499,170 420,423 420,423 2016-2017 441,587 453,034 441,806 454,642 513,415 440,266 440,266 2017-2018 160,270 172,513 167,913 245,917 877,640 158,998 158,998 2018-2019 565,066 661,073 582,982 750,112 1,229,400 548,608 548,608 2019-2020 685,258 817,545 732,446 971,320 893,095 686,000 686,000 2020-2021 1,780,900 2,068,715 1,648,019 1,503,631 899,946 1,576,000 1,576,000 2021-2022 1,404,081 1,676,898 1,284,790 1,226,589 1,153,656 1,256,000 1,256,000 2022-2023 325,093 55,757 1,020,242 1,143,077 1,082,620 1,173,000 1,173,000 Totals $12,906,084 $12,906,084
Projected Losses for the Year 2022-2023 (H) $1,173,000 $1,173,000 Projected Losses for the Year 2023-2024 (I) 1,294,000 1,294,000 Notes:
(A) From Appendix A, Page 1, Column (G).
(B) From Appendix B, Page 1, Column (G).
(C) From Appendix C, Page 1, Column (G).
(D) From Appendix C, Page 2, Column (G).
(E) From Appendix D, Page 1, Column (C).
(F) Selected averages of (A), (B), (C), (D), and (E).
(G) (F) limited to applicable aggregate.
(H) From Exhibit 4, Page 1, Line (K).
(I) From Exhibit 4, Page 1, Line (K).

This exhibit summarizes the results of the actuarial methods we have applied to estimate ultimate losses for each year. It is important to apply a number of estimation methods because each one relies on specific assumptions about the claims process that tend to hold generally true, but that may be violated in specific situations. Thus, the more estimation methods that can be applied, the better. 42 Exhibit 3

City of San Clemente - Liability
Estimated Ultimate Limited Losses Capped at $100,000 per Claim Exposure Exposure
Reported Paid Method Method Selected
Loss Loss Based on Based on Frequency- Ultimate
Accident Development Development Reported Paid Severity Limited Year Method Method Losses Losses Method Losses
(A) (B) (C) (D) (E) (F)
2005-2006 38,028 38,028 38,028 38,028 38,036 38,028
2006-2007 370,580 370,580 370,580 370,580 370,591 370,580 2007-2008 187,085 187,085 187,085 187,085 187,100 187,085 2008-2009 761,721 761,721 761,721 761,721 761,739 761,721 2009-2010 519,101 519,101 519,101 519,101 519,090 519,101 2010-2011 272,478 272,478 272,478 272,478 272,489 272,478 2011-2012 335,387 335,387 335,387 335,387 335,389 335,387 2012-2013 272,990 272,990 272,990 272,990 273,000 272,990 2013-2014 177,158 177,158 177,158 177,158 177,165 177,158 2014-2015 734,563 734,563 734,563 734,563 734,547 734,563 2015-2016 266,931 266,931 266,931 266,931 266,945 266,931 2016-2017 271,070 272,425 271,070 272,425 271,075 271,070 2017-2018 158,998 161,383 158,998 167,713 457,579 158,998 2018-2019 249,851 263,524 251,665 283,455 634,050 248,608 2019-2020 425,505 444,631 427,973 479,827 454,965 426,000 2020-2021 726,996 743,317 719,490 669,968 452,914 727,000 2021-2022 626,220 599,332 611,285 576,069 573,678 627,000 2022-2023 218,890 28,495 482,858 553,604 532,000 593,000 Totals $6,987,698
Projected Losses for the Year 2022-2023 (G) $593,000
Projected Losses for the Year 2023-2024 (H) 628,000
Notes:
(A) From Appendix A, Page 1, Column (D).
(B) From Appendix B, Page 1, Column (D).
(C) Based on results in Appendix C, Page 1.
(D) Based on results in Appendix C, Page 2.
(E) Based on results in Appendix D, Page 1.
(F) Selected averages of (A), (B), (C), (D), and (E).
(G) From Exhibit 4, Page 1, Line (K) / Line (G).
(H) From Exhibit 4, Page 1, Line (K) / Line (G).

This exhibit summarizes the results of the actuarial methods we have applied to estimate limited losses for each year. These results are used to select a limited loss rate for future years. 43 Exhibit 4

City of San Clemente - Liability
Selection of Projected Limited Loss Rate
and Projection of Program Losses and ALAE
Ultimate Trended Trended Trended
Accident Limited Trend Limited Payroll Limited
Year Losses Factor Losses ($00) Loss Rate
(A) (B) (C) (D) (E)
2005-2006 38,028 1.084 41,222 198,386 0.208
2006-2007 370,580 1.079 399,856 200,199 1.997
2007-2008 187,085 1.074 200,929 205,491 0.978
2008-2009 761,721 1.069 814,280 215,752 3.774
2009-2010 519,101 1.064 552,323 208,696 2.647
2010-2011 272,478 1.059 288,554 196,436 1.469
2011-2012 335,387 1.054 353,498 198,618 1.780
2012-2013 272,990 1.049 286,367 197,878 1.447
2013-2014 177,158 1.044 184,953 195,422 0.946
2014-2015 734,563 1.039 763,211 191,245 3.991
2015-2016 266,931 1.034 276,007 185,721 1.486
2016-2017 271,070 1.030 279,202 187,312 1.491
2017-2018 158,998 1.025 162,973 193,028 0.844
2018-2019 248,608 1.020 253,580 202,100 1.255
2019-2020 426,000 1.015 432,390 212,341 2.036
2020-2021 727,000 1.010 734,270 184,958 3.970
2021-2022 627,000 1.005 630,135 184,893 3.408
2022-2023 593,000 1.000 593,000 184,893 3.207
Totals $6,987,698 $7,246,750 3,543,369 $2.045
16/17-20/21 1,831,676 1,862,415 979,739 1.901
19/20-21/22 1,780,000 1,796,795 582,192 3.086
20/21-22/23 1,947,000 1,957,405 554,744 3.528
(F) Selected Limited Rate: $3.300
Prior:

Program Year: 2022-2023 2023-2024

1.978 2.059

1.000 1.005
$6.344 $6.829
184,893 189,515
1,173,000 1,294,000
00 *
Factor to N:

+
Trend Factor:

,
Program Rate:

-
Trended Payroll ($00):

.

Projected Program Losses:

/
Projected ULAE:

0 Projected Loss and ULAE: $1,173,000 $1,294,000
Notes appear on the next page.
44 Exhibit 4

City of San Clemente - Liability
Selection of Projected Limited Loss Rate
and Projection of Program Losses and ALAE
Notes:
(A) From Exhibit 3, Page 2, Column (F).

For purposes of projecting future losses, losses
are capped at $100,000 per occurrence.
(B) From Appendix E, Page 1, Column (B).
(C) (A) x (B).
(D) Appendix K, Column (C).
(E) (C) / (D).
(F) Selected based on (E).
(G) Based on a Burr distribution, a mathematical model
of claims sizes. 2022-2023 is (K) / (A).
(H) From Appendix E.
(I) (F) x (G) x (H). 2022-2023 is (K) / (J).
(J) Appendix K, Column (C).
(K) (I) x (J). 2022-2023 is from Exhibit 3, Page 1.
(L) Based on an estimated claim closing pattern and the City's historical claims administration expenses.
(M) (K) + (L).

This exhibit shows the calculation of future loss costs based on the past loss rates. The projections will be accurate only to the extent that what has happened in the past is representative of what will happen in the future. 45 Appendix A

City of San Clemente - Liability
Reported Loss Development
Limited Reported Program Reported
Reported Loss Ultimate Reported Loss Ultimate
Accident Losses as Development Limited Losses as Development Program Year of 12/31/22 Factor Losses of 12/31/22 Factor Losses (A) (B) (C) (D) (E) (F) (G)
2005-2006 38,028 1.000 38,028 38,028 1.000 38,028
2006-2007 370,580 1.000 370,580 738,196 1.000 738,196
2007-2008 187,085 1.000 187,085 337,085 1.000 337,085
2008-2009 761,721 1.000 761,721 1,361,721 1.000 1,361,721 2009-2010 519,101 1.000 519,101 844,729 1.000 844,729
2010-2011 272,478 1.000 272,478 572,478 1.000 572,478
2011-2012 335,387 1.000 335,387 427,370 1.000 427,370
2012-2013 272,990 1.000 272,990 572,990 1.000 572,990
2013-2014 177,158 1.000 177,158 327,158 1.000 327,158
2014-2015 734,563 1.000 734,563 1,427,034 1.000 1,427,034 2015-2016 266,931 1.000 266,931 420,423 1.000 420,423
2016-2017 271,070 1.000 271,070 440,266 1.003 441,587
2017-2018 158,998 1.000 158,998 158,998 1.008 160,270
2018-2019 248,608 1.005 249,851 548,608 1.030 565,066
2019-2020 420,875 1.011 425,505 629,833 1.088 685,258
2020-2021 692,377 1.050 726,996 1,421,309 1.253 1,780,900 2021-2022 467,677 1.339 626,220 767,677 1.829 1,404,081 2022-2023 54,491 4.017 218,890 54,491 5.966 325,093
Totals $6,250,118 $6,613,551 $11,088,394 $12,429,468
Notes:

$
Years are 7/1 to 6/30.

%
Provided by the City. These losses exclude
amounts over $100,000 per occurrence.

&
From Appendix A, Page 2.

'
(B) x (C). These estimated losses exclude
amounts over $100,000 per occurrence.

(
Losses capped at . Amounts are provided by the City.

)
Derived from factors on Appendix A, Page 4.

*
(E) x (F).

This method tends to understate ultimate losses for the most recent several years because the large losses for those years generally have not yet emerged at the time of our review.

This exhibit shows the calculation of estimated ultimate losses for each year based on paid losses and case reserves as reported by the claims administrator. These losses tend to "develop" or change from period to period as more information becomes available about the cases. This development tends to follow quantifiable patterns over time.
46 Appendix A

City of San Clemente - Liability
Reported Loss Development
Limited Losses Reported as of:

Accident 6 18 30 42 54 66 78 90 102 114 126
Year Months Months Months Months Months Months Months Months Months Months Months 2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009 761,721
2009-2010 519,101 519,101
2010-2011 272,478 272,478 272,478
2011-2012 335,387 335,387 335,387 335,387
2012-2013 272,990 272,990 272,990 272,990 272,990
2013-2014 177,158 177,158 177,158 177,158 177,158
2014-2015 684,563 734,563 734,563 734,563 734,563
2015-2016 266,931 266,931 266,931 266,931 266,931
2016-2017 240,460 271,070 271,070 271,070 271,070
2017-2018 345,991 161,009 158,998 158,998 158,998
2018-2019 125,128 456,111 329,083 248,608 248,608
2019-2020 264,423 273,133 385,437 420,875
2020-2021 302,758 660,571 692,377
2021-2022 118,780 467,677
2022-2023 54,491
Reported Loss Development Factors:
6-18 18-30 30-42 42-54 54-66 66-78 78-90 90-102 102-114 114-126 126-138 Months Months Months Months Months Months Months Months Months Months Months 2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009 1.000
2009-2010 1.000 1.000
2010-2011 1.000 1.000 1.000
2011-2012 1.000 1.000 1.000 1.000
2012-2013 1.000 1.000 1.000 1.000
2013-2014 1.000 1.000 1.000 1.000
2014-2015 1.073 1.000 1.000 1.000
2015-2016 1.000 1.000 1.000 1.000
2016-2017 1.127 1.000 1.000 1.000
2017-2018 0.465 0.988 1.000 1.000
2018-2019 3.645 0.721 0.755 1.000
2019-2020 1.033 1.411 1.092
2020-2021 2.182 1.048
2021-2022 3.937
6-18 18-30 30-42 42-54 54-66 66-78 78-90 90-102 102-114 114-126 126-138 Months Months Months Months Months Months Months Months Months Months Months Average 2.699 0.911 0.991 1.000 1.018 1.000 1.000 1.000 1.000 1.000 1.000 Dollar-Wtd. Avgs.

Total 2.290 0.903 0.985 1.000 1.036 1.000 1.000 1.000 1.000 1.000 1.000 3-yr 2.043 1.012 0.946 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 4-yr 2.290 0.903 0.985 1.000 1.036 1.000 1.000 1.000 1.000 1.000 1.000 Comparative
Factors 3.155 1.344 1.039 1.006 1.001 1.002 1.003 1.005 1.005 1.003 1.002 Prior 0.000 1.470 1.120 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Selected 3.000 1.275 1.039 1.006 1.005 1.000 1.000 1.000 1.000 1.000 1.000 Cumulated 4.017 1.339 1.050 1.011 1.005 1.000 1.000 1.000 1.000 1.000 1.000 47 Accident
Year
2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
2015-2016
2016-2017
2017-2018
2018-2019
2019-2020
2020-2021
2021-2022
2022-2023
2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
2015-2016
2016-2017
2017-2018
2018-2019
2019-2020
2020-2021
2021-2022
Average
Dollar-Wtd. Avgs
Total
3-yr
4-yr
Comparative
Factors
Prior
Selected
Cumulated
Appendix A

City of San Clemente - Liability
Reported Loss Development
Limited Losses Reported as of:
138 150 162 174 186 198 210
Months Months Months Months Months Months Months
38,028 38,028 38,028 38,028 38,028
370,580 370,580 370,580 370,580 370,580
187,085 187,085 187,085 187,085 187,085
761,721 761,721 761,721 761,721
519,101 519,101 519,101
272,478 272,478
335,387
Reported Loss Development Factors:
138-150 150-162 162-174 174-186 186-198 198-210 210-Ult.

Months Months Months Months Months Months Months

1.000 1.000 1.000 1.000

1.000 1.000 1.000 1.000

1.000 1.000 1.000 1.000

1.000 1.000 1.000

1.000 1.000

1.000
138-150 150-162 162-174 174-186 186-198 198-210 210-Ult.

Months Months Months Months Months Months Months

1.000 1.000 1.000 1.000 1.000 1.000

1.000 1.000 1.000 1.000 1.000 1.000

1.000 1.000 1.000 1.000

1.000 1.000 1.000

1.003 1.003 1.002 1.002 1.002 1.002 1.006

1.000 1.000 1.000 1.000 1.000 1.000 1.000

1.000 1.000 1.000 1.000 1.000 1.000 1.000

1.000 1.000 1.000 1.000 1.000 1.000 1.000
48 Appendix A

City of San Clemente - Liability
Reported between $100,000 and $500,000 Loss Development Losses Reported as of:

Accident 6 18 30 42 54 66 78 90 102 114 126
Year Months Months Months Months Months Months Months Months Months Months Months 2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009 956,868
2009-2010 575,629 575,629
2010-2011 800,000 800,000 800,000
2011-2012 91,983 91,983 91,983 91,983
2012-2013 556,314 556,314 556,314 556,314 556,314
2013-2014 295,000 294,212 294,212 294,212 294,212
2014-2015 1,065,595 1,443,612 1,442,470 1,442,470 1,442,470 2015-2016 403,492 384,194 384,194 384,194 384,194
2016-2017 276,635 685,872 419,196 419,196 419,196
2017-2018 288,153
2018-2019 200,002 750,000 1,042,656 493,053 493,053
2019-2020 281,323 280,318 491,872 208,958
2020-2021 601,536 801,535 1,510,591
2021-2022 50,000 350,000
2022-2023
Reported Loss Development Factors:
6-18 18-30 30-42 42-54 54-66 66-78 78-90 90-102 102-114 114-126 126-138 Months Months Months Months Months Months Months Months Months Months Months 2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009 1.000
2009-2010 1.000 1.000
2010-2011 1.000 1.000 1.000
2011-2012 1.000 1.000 1.000 1.000
2012-2013 1.000 1.000 1.000 1.000
2013-2014 0.997 1.000 1.000 1.000
2014-2015 1.355 0.999 1.000 1.000
2015-2016 0.952 1.000 1.000 1.000
2016-2017 2.479 0.611 1.000 1.000
2017-2018
2018-2019 3.750 1.390 0.473 1.000
2019-2020 0.996 1.755 0.425
2020-2021 1.332 1.885
2021-2022 7.000
6-18 18-30 30-42 42-54 54-66 66-78 78-90 90-102 102-114 114-126 126-138 Months Months Months Months Months Months Months Months Months Months Months Average 3.270 1.677 1.126 0.854 1.118 0.999 1.000 1.000 1.000 1.000 1.000 Dollar-Wtd. Avgs.

Total 1.926 1.662 0.766 0.819 1.202 0.999 1.000 1.000 1.000 1.000 1.000 3-yr 1.535 1.662 0.999 1.000 1.000 1.000 1.000 1.000
4-yr 1.926 0.999 1.000 1.000 1.000 1.000 1.000
Comparative
Factors 3.914 1.840 1.319 1.118 1.040 1.020 1.015 1.014 1.009 1.003 1.003 Prior 0.000 2.750 1.900 1.380 1.270 1.130 1.100 1.080 1.070 1.055 1.050 Selected 3.914 1.840 1.319 1.118 1.040 1.010 1.005 1.001 1.000 1.000 1.000 Cumulated 11.229 2.869 1.559 1.182 1.057 1.016 1.006 1.001 1.000 1.000 1.000 49 Accident
Year
2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
2015-2016
2016-2017
2017-2018
2018-2019
2019-2020
2020-2021
2021-2022
2022-2023
2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
2015-2016
2016-2017
2017-2018
2018-2019
2019-2020
2020-2021
2021-2022
Average
Dollar-Wtd. Avgs
Total
3-yr
4-yr
Comparative
Factors
Prior
Selected
Cumulated
Appendix A

City of San Clemente - Liability
Reported between $100,000 and $500,000 Loss Development Losses Reported as of:
138 150 162 174 186 198
Months Months Months Months Months Months
867,616 867,616 867,616 867,616 867,616
400,000 400,000 400,000 400,000 400,000
956,868 956,868 956,868 956,868
575,629 575,629 575,629
800,000 800,000
91,983
Reported Loss Development Factors:
138-150 150-162 162-174 174-186 186-198 198-Ult.

Months Months Months Months Months Months

1.000 1.000 1.000 1.000

1.000 1.000 1.000 1.000

1.000 1.000 1.000

1.000 1.000

1.000
138-150 150-162 162-174 174-186 186-198 198-Ult.

Months Months Months Months Months Months

1.000 1.000 1.000 1.000 1.000

1.000 1.000 1.000 1.000 1.000

1.000 1.000 1.000

1.000 1.000

1.004 1.003 1.005 1.004 1.002 1.013

1.040 1.030 1.030 1.025 1.025 1.020

1.000 1.000 1.000 1.000 1.000 1.000

1.000 1.000 1.000 1.000 1.000 1.000
50 Appendix B

City of San Clemente - Liability
Paid Loss Development
Limited Paid Program Paid
Paid Loss Ultimate Paid Loss Ultimate
Accident Losses as Development Limited Losses as Development Program Year of 12/31/22 Factor Losses of 12/31/22 Factor Losses (A) (B) (C) (D) (E) (F) (G)
2005-2006 38,028 1.000 38,028 38,028 1.000 38,028
2006-2007 370,580 1.000 370,580 738,196 1.000 738,196
2007-2008 187,085 1.000 187,085 337,085 1.000 337,085
2008-2009 761,721 1.000 761,721 1,361,721 1.000 1,361,721 2009-2010 519,101 1.000 519,101 844,729 1.000 844,729
2010-2011 272,478 1.000 272,478 572,478 1.000 572,478
2011-2012 335,387 1.000 335,387 427,370 1.000 427,370
2012-2013 272,990 1.000 272,990 572,990 1.000 572,990
2013-2014 177,158 1.000 177,158 327,158 1.003 328,139
2014-2015 734,563 1.000 734,563 1,427,034 1.007 1,437,023 2015-2016 266,931 1.000 266,931 420,423 1.014 426,309
2016-2017 271,070 1.005 272,425 440,266 1.029 453,034
2017-2018 158,998 1.015 161,383 158,998 1.085 172,513
2018-2019 248,608 1.060 263,524 548,608 1.205 661,073
2019-2020 366,253 1.214 444,631 536,799 1.523 817,545
2020-2021 437,245 1.700 743,317 832,481 2.485 2,068,715 2021-2022 163,976 3.655 599,332 267,704 6.264 1,676,898 2022-2023 891 31.981 28,495 891 62.578 55,757
Totals $5,583,063 $6,449,130 $9,852,959 $12,989,603
Notes:

$
Years are 7/1 to 6/30.

%
Provided by the City. These losses exclude
amounts over $100,000 per occurrence.

&
From Appendix B, Page 2.

'
(B) x (C). These estimated losses exclude
amounts over $100,000 per occurrence.

(
Losses capped at . Amounts are provided by the City.

)
Derived from factors on Appendix B, Page 4.

*
(E) x (F).

This method tends to understate ultimate losses for the most recent several years because the large losses for those years generally have not yet emerged at the time of our review.

This exhibit shows the calculation of estimated ultimate losses for each year based on paid losses as reported by the claims administrator. These losses tend to "develop" or change from period to period as more information becomes available about the cases. This development tends to follow quantifiable patterns over time. 51 Appendix B

City of San Clemente - Liability
Paid Loss Development
Limited Losses Paid as of:

Accident 6 18 30 42 54 66 78 90 102 114 126
Year Months Months Months Months Months Months Months Months Months Months Months 2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009 761,721
2009-2010 519,101 519,101
2010-2011 272,478 272,478 272,478
2011-2012 335,387 335,387 335,387 335,387
2012-2013 272,990 272,990 272,990 272,990 272,990
2013-2014 177,158 177,158 177,158 177,158 177,158
2014-2015 634,563 734,563 734,563 734,563 734,563
2015-2016 266,931 266,931 266,931 266,931 266,931
2016-2017 61,730 147,225 260,931 271,070 271,070
2017-2018 46,119 158,998 158,998 158,998 158,998
2018-2019 8,481 114,777 247,419 248,608 248,608
2019-2020 46,233 153,191 317,845 366,253
2020-2021 20,750 306,840 437,245
2021-2022 9,642 163,976
2022-2023 891
Paid Loss Development Factors:
6-18 18-30 30-42 42-54 54-66 66-78 78-90 90-102 102-114 114-126 126-138 Months Months Months Months Months Months Months Months Months Months Months 2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009 1.000
2009-2010 1.000 1.000
2010-2011 1.000 1.000 1.000
2011-2012 1.000 1.000 1.000 1.000
2012-2013 1.000 1.000 1.000 1.000
2013-2014 1.000 1.000 1.000 1.000
2014-2015 1.158 1.000 1.000 1.000
2015-2016 1.000 1.000 1.000 1.000
2016-2017 2.385 1.772 1.039 1.000
2017-2018 3.448 1.000 1.000 1.000
2018-2019 13.534 2.156 1.005 1.000
2019-2020 3.313 2.075 1.152
2020-2021 14.787 1.425
2021-2022 17.006
6-18 18-30 30-42 42-54 54-66 66-78 78-90 90-102 102-114 114-126 126-138 Months Months Months Months Months Months Months Months Months Months Months Average 12.160 2.276 1.386 1.193 1.049 1.000 1.000 1.000 1.000 1.000 1.000 Dollar-Wtd. Avgs.

Total 8.681 1.871 1.172 1.138 1.083 1.000 1.000 1.000 1.000 1.000 1.000 3-yr 8.144 1.744 1.068 1.205 1.015 1.000 1.000 1.000 1.000 1.000 1.000 4-yr 8.681 1.871 1.172 1.138 1.083 1.000 1.000 1.000 1.000 1.000 1.000 Comparative
Factors 4.760 2.200 1.444 1.145 1.044 1.019 1.015 1.011 1.009 1.008 1.006 Prior 0.000 2.500 1.400 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Selected 8.750 2.150 1.400 1.145 1.044 1.010 1.005 1.000 1.000 1.000 1.000 Cumulated 31.981 3.655 1.700 1.214 1.060 1.015 1.005 1.000 1.000 1.000 1.000 52 Accident
Year
2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
2015-2016
2016-2017
2017-2018
2018-2019
2019-2020
2020-2021
2021-2022
2022-2023
2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
2015-2016
2016-2017
2017-2018
2018-2019
2019-2020
2020-2021
2021-2022
Average
Dollar-Wtd. Avgs
Total
3-yr
4-yr
Comparative
Factors
Prior
Selected
Cumulated
Appendix B

City of San Clemente - Liability
Paid Loss Development
Limited Losses Paid as of:
138 150 162 174 186 198 210
Months Months Months Months Months Months Months
38,028 38,028 38,028 38,028 38,028
370,580 370,580 370,580 370,580 370,580
187,085 187,085 187,085 187,085 187,085
761,721 761,721 761,721 761,721
519,101 519,101 519,101
272,478 272,478
335,387
Paid Loss Development Factors:
138-150 150-162 162-174 174-186 186-198 198-210 210-Ult.

Months Months Months Months Months Months Months

1.000 1.000 1.000 1.000

1.000 1.000 1.000 1.000

1.000 1.000 1.000 1.000

1.000 1.000 1.000

1.000 1.000

1.000
138-150 150-162 162-174 174-186 186-198 198-210 210-Ult.

Months Months Months Months Months Months Months

1.000 1.000 1.000 1.000 1.000 1.000

1.000 1.000 1.000 1.000 1.000 1.000

1.000 1.000 1.000 1.000

1.000 1.000 1.000

1.006 1.004 1.004 1.004 1.002 1.002 1.009

1.000 1.000 1.000 1.000 1.000 1.000 1.000

1.000 1.000 1.000 1.000 1.000 1.000 1.000

1.000 1.000 1.000 1.000 1.000 1.000 1.000
53 Appendix B

City of San Clemente - Liability
Paid between $100,000 and $500,000 Loss Development
Losses Paid as of:

Accident 6 18 30 42 54 66 78 90 102 114 126
Year Months Months Months Months Months Months Months Months Months Months Months 2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009 956,868
2009-2010 575,629 575,629
2010-2011 800,000 800,000 800,000
2011-2012 91,983 91,983 91,983 91,983
2012-2013 556,314 556,314 556,314 556,314 556,314
2013-2014 293,026 294,212 294,212 294,212 294,212
2014-2015 762,209 1,178,861 1,442,470 1,442,470 1,442,470 2015-2016 251,148 384,194 384,194 384,194 384,194
2016-2017 19,196 69,089 419,196
2017-2018
2018-2019 402,312 493,053 493,053
2019-2020 257,543 406,851 170,546
2020-2021 448,128 729,030
2021-2022 103,728
2022-2023
Paid Loss Development Factors:
6-18 18-30 30-42 42-54 54-66 66-78 78-90 90-102 102-114 114-126 126-138 Months Months Months Months Months Months Months Months Months Months Months 2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009 1.000
2009-2010 1.000 1.000
2010-2011 1.000 1.000 1.000
2011-2012 1.000 1.000 1.000 1.000
2012-2013 1.000 1.000 1.000 1.000
2013-2014 1.004 1.000 1.000 1.000
2014-2015 1.547 1.224 1.000 1.000
2015-2016 1.530 1.000 1.000 1.000
2016-2017 3.599 6.067
2017-2018
2018-2019 1.226 1.000
2019-2020 1.580 0.419
2020-2021 1.627
2021-2022
6-18 18-30 30-42 42-54 54-66 66-78 78-90 90-102 102-114 114-126 126-138 Months Months Months Months Months Months Months Months Months Months Months Average 1.604 0.823 1.265 2.049 2.324 1.000 1.000 1.000 1.000 1.000 Dollar-Wtd. Avgs.

Total 1.610 0.820 1.179 1.400 1.319 1.000 1.000 1.000 1.000 1.000 3-yr 1.376 1.000 1.000 1.000 1.000 1.000
4-yr 1.319 1.000 1.000 1.000 1.000 1.000
Comparative
Factors 38.826 4.564 2.255 1.469 1.201 1.111 1.051 1.032 1.027 1.017 1.008 Prior 0.000 4.000 3.100 2.400 1.750 1.500 1.300 1.250 1.175 1.100 1.080 Selected 38.826 4.564 2.255 1.469 1.201 1.111 1.025 1.015 1.010 1.005 1.001 Cumulated 827.537 21.314 4.670 2.071 1.410 1.174 1.057 1.031 1.016 1.006 1.001 54 Accident
Year
2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
2015-2016
2016-2017
2017-2018
2018-2019
2019-2020
2020-2021
2021-2022
2022-2023
2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
2015-2016
2016-2017
2017-2018
2018-2019
2019-2020
2020-2021
2021-2022
Average
Dollar-Wtd. Avgs
Total
3-yr
4-yr
Comparative
Factors
Prior
Selected
Cumulated
Appendix B

City of San Clemente - Liability
Paid between $100,000 and $500,000 Loss Development
Losses Paid as of:
138 150 162 174 186 198
Months Months Months Months Months Months
867,616 867,616 867,616 867,616 867,616
400,000 400,000 400,000 400,000 400,000
956,868 956,868 956,868 956,868
575,629 575,629 575,629
800,000 800,000
91,983
Paid Loss Development Factors:
138-150 150-162 162-174 174-186 186-198 198-Ult.

Months Months Months Months Months Months

1.000 1.000 1.000 1.000

1.000 1.000 1.000 1.000

1.000 1.000 1.000

1.000 1.000

1.000
138-150 150-162 162-174 174-186 186-198 198-Ult.

Months Months Months Months Months Months

1.000 1.000 1.000 1.000 1.000

1.000 1.000 1.000 1.000 1.000

1.000 1.000 1.000

1.000 1.000

1.007 1.007 1.009 1.009 1.007 1.037

1.070 1.055 1.045 1.035 1.035 1.030

1.000 1.000 1.000 1.000 1.000 1.000

1.000 1.000 1.000 1.000 1.000 1.000
55 Appendix C

City of San Clemente - Liability
Exposure and Development Method
Based on Reported Losses
Reported Percentage Incurred
Trended Reported Loss of Losses but not Ultimate
Accident Payroll Losses as Development Yet to Be Program Reported Program Year ($00) of 12/31/22 Factor Reported Rate (IBNR) Losses (A) (B) (C) (D) (E) (F) (G)
2005-2006 198,386 38,028 1.000 0.000 0.314 0 38,028
2006-2007 200,199 738,196 1.000 0.000 3.067 0 738,196
2007-2008 205,491 337,085 1.000 0.000 1.530 0 337,085
2008-2009 215,752 1,361,721 1.000 0.000 6.020 0 1,361,721 2009-2010 208,696 844,729 1.000 0.000 4.300 0 844,729
2010-2011 196,436 572,478 1.000 0.000 2.431 0 572,478
2011-2012 198,618 427,370 1.000 0.000 2.996 0 427,370
2012-2013 197,878 572,990 1.000 0.000 2.481 0 572,990
2013-2014 195,422 327,158 1.000 0.000 1.653 0 327,158
2014-2015 191,245 1,427,034 1.000 0.000 7.090 0 1,427,034 2015-2016 185,721 420,423 1.000 0.000 2.687 0 420,423
2016-2017 187,312 440,266 1.003 0.003 2.741 1,540 441,806 2017-2018 193,028 158,998 1.008 0.008 5.773 8,915 167,913 2018-2019 202,100 548,608 1.030 0.029 5.865 34,374 582,982 2019-2020 212,341 629,833 1.088 0.081 5.966 102,613 732,446 2020-2021 184,958 1,421,309 1.253 0.202 6.068 226,710 1,648,019 2021-2022 184,893 767,677 1.829 0.453 6.174 517,113 1,284,790 2022-2023 184,893 54,491 5.966 0.832 6.278 965,751 1,020,242 Totals 3,543,369 $11,088,394 $1,857,016 $12,945,410
Notes:

$
Appendix K, Column (C).

%
Provided by the City. These losses exclude amounts
incurred above for each year.

&
From Appendix A, Page 1, Column (F).

'
1 - 1 / (C).

(
From Appendix C, Page 3, Column (H).

)
(A) x (D) x (E).

*
(B) + (F).

This exhibit shows the calculation of ultimate losses based on the assumption that there is an underlying relationship between losses and exposure that changes in regular ways over time. The method relies on the premise that the losses that are currently unreported will cost what this relationship would suggest. 56 Appendix C

City of San Clemente - Liability
Exposure and Development Method
Based on Paid Losses
Paid Percentage
Trended Paid Loss of Losses Incurred Ultimate
Accident Payroll Losses as Development Yet to Be Program but not Program Year ($00) of 12/31/22 Factor Paid Rate Paid Losses
(A) (B) (C) (D) (E) (F) (G)
2005-2006 198,386 38,028 1.000 0.000 0.314 0 38,028
2006-2007 200,199 738,196 1.000 0.000 3.067 0 738,196
2007-2008 205,491 337,085 1.000 0.000 1.530 0 337,085
2008-2009 215,752 1,361,721 1.000 0.000 6.020 0 1,361,721 2009-2010 208,696 844,729 1.000 0.000 4.300 0 844,729
2010-2011 196,436 572,478 1.000 0.000 2.431 0 572,478
2011-2012 198,618 427,370 1.000 0.000 2.996 0 427,370
2012-2013 197,878 572,990 1.000 0.000 2.481 0 572,990
2013-2014 195,422 327,158 1.003 0.003 1.653 969 328,127 2014-2015 191,245 1,427,034 1.007 0.007 7.090 9,491 1,436,525 2015-2016 185,721 420,423 1.014 0.014 2.687 6,986 427,409 2016-2017 187,312 440,266 1.029 0.028 2.741 14,376 454,642 2017-2018 193,028 158,998 1.085 0.078 5.773 86,919 245,917 2018-2019 202,100 548,608 1.205 0.170 5.865 201,504 750,112 2019-2020 212,341 536,799 1.523 0.343 5.966 434,521 971,320 2020-2021 184,958 832,481 2.485 0.598 6.068 671,150 1,503,631 2021-2022 184,893 267,704 6.264 0.840 6.174 958,885 1,226,589 2022-2023 184,893 891 62.578 0.984 6.278 1,142,186 1,143,077 Totals 3,543,369 $9,852,959 $3,526,989 $13,379,948
Notes:

$
Appendix K, Column (C).

%
Provided by the City. These losses exclude
amounts paid above  for each year.

&
From Appendix B, Page 1, Column (F).

'
1 - 1 / (C).

(
From Appendix C, Page 3, Column (H).

)
(A) x (D) x (E).

*
(B) + (F).

This exhibit shows the calculation of ultimate losses based on the assumption that there is an underlying relationship between losses and exposure that changes in regular ways over time. The method relies on the premise that the losses that are currently unpaid will cost what this relationship would suggest. 57 Appendix C

City of San Clemente - Liability
Exposure and Development Method
Trended Ultimate Trended Trended
Accident Payroll Limited Trend Limited Limited Limited Factor to Program Year ($00) Losses Factor Losses Loss Rate Loss Rate  Loss Rate (A) (B) (C) (D) (E) (F) (G) (H)
2005-2006 198,386 38,028 1.084 41,222 0.208 0.192 1.633 0.314 2006-2007 200,199 370,580 1.079 399,856 1.997 1.851 1.657 3.067 2007-2008 205,491 187,085 1.074 200,929 0.978 0.910 1.681 1.530 2008-2009 215,752 761,721 1.069 814,280 3.774 3.531 1.705 6.020 2009-2010 208,696 519,101 1.064 552,323 2.647 2.487 1.729 4.300 2010-2011 196,436 272,478 1.059 288,554 1.469 1.387 1.753 2.431 2011-2012 198,618 335,387 1.054 353,498 1.780 1.689 1.774 2.996 2012-2013 197,878 272,990 1.049 286,367 1.447 1.380 1.798 2.481 2013-2014 195,422 177,158 1.044 184,953 0.946 0.907 1.822 1.653 2014-2015 191,245 734,563 1.039 763,211 3.991 3.841 1.846 7.090 2015-2016 185,721 266,931 1.034 276,007 1.486 1.437 1.870 2.687 2016-2017 187,312 271,070 1.030 279,202 1.491 1.447 1.894 2.741 2017-2018 193,028 158,998 1.025 162,973 0.844 3.010 1.918 5.773 2018-2019 202,100 248,608 1.020 253,580 1.255 3.025 1.939 5.865 2019-2020 212,341 426,000 1.015 432,390 2.036 3.039 1.963 5.966 2020-2021 184,958 727,000 1.010 734,270 3.970 3.054 1.987 6.068 2021-2022 184,893 627,000 1.005 630,135 3.408 3.070 2.011 6.174 2022-2023 184,893 219,000 1.000 219,000 1.184 3.085 2.035 6.278 Total/Avg 3,543,369 $6,613,698 $6,872,750 $1.940
16/17-20/21 979,739 1,831,676 1,862,415 1.901
19/20-21/22 582,192 1,780,000 1,796,795 3.086
Selected Limited Rate: $3.085
Prior:

Notes:
(A) Appendix K, Column (C).
(B) Selected average of results from Appendices A and B. (C) From Appendix E, Page 1, Column (B).
(D) (B) x (C).
(E) (D) / (A).
(F) Selected Limited Rate / (C). For 2016-2017 and prior (B) / (A). (G) Based on a Burr distribution, a mathematical model
of claim sizes.
(H) (F) x (G).

This exhibit shows the calculation of the underlying historical relationship between losses and exposure that is needed to apply the estimation methods shown on pages 1 and 2 of this Appendix. 58 Appendix D

City of San Clemente - Liability
Frequency and Severity Method
Ultimate Adjusted Ultimate
Accident Program Ultimate Program
Year Severity Claims Losses
(A) (B) (C)
2005-2006 1,679 37 62,123
2006-2007 21,175 29 614,075
2007-2008 6,290 50 314,500
2008-2009 31,677 41 1,298,757
2009-2010 27,197 33 897,501
2010-2011 9,748 49 477,652
2011-2012 19,193 31 594,983
2012-2013 12,271 40 490,840
2013-2014 7,173 45 322,785
2014-2015 41,090 33 1,355,970
2015-2016 14,262 35 499,170
2016-2017 14,669 35 513,415
2017-2018 23,720 37 877,640
2018-2019 24,588 50 1,229,400
2019-2020 25,517 35 893,095
2020-2021 26,469 34 899,946
2021-2022 27,468 42 1,153,656
2022-2023 28,490 38 1,082,620
Total 694 $13,578,128
Notes:
(A) From Appendix D, Page 2, Column (H).
(B) From Appendix D, Page 2, Column (B).
(C) (A) x (B).

This exhibit shows the calculation of the estimated
ultimate losses for each year based on the
observed average frequency and severity of
claims.
59 Appendix D

City of San Clemente - Liability
Frequency and Severity Method
Ultimate Adjusted Ultimate Trended
Accident Limited Ultimate Limited Trend Limited Limited Factor to Program Year Losses Claims Severity Factor Severity Severity  Severity (A) (B) (C) (D) (E) (F) (G) (H)
2005-2006 38,028 37 1,028 1.521 1,564 1,028 1.633 1,679 2006-2007 370,580 29 12,779 1.484 18,964 12,779 1.657 21,175 2007-2008 187,085 50 3,742 1.448 5,418 3,742 1.681 6,290 2008-2009 761,721 41 18,579 1.412 26,234 18,579 1.705 31,677 2009-2010 519,101 33 15,730 1.378 21,676 15,730 1.729 27,197 2010-2011 272,478 49 5,561 1.344 7,474 5,561 1.753 9,748 2011-2012 335,387 31 10,819 1.312 14,195 10,819 1.774 19,193 2012-2013 272,990 40 6,825 1.280 8,736 6,825 1.798 12,271 2013-2014 177,158 45 3,937 1.249 4,917 3,937 1.822 7,173 2014-2015 734,563 33 22,259 1.218 27,111 22,259 1.846 41,090 2015-2016 266,931 35 7,627 1.188 9,061 7,627 1.870 14,262 2016-2017 271,070 35 7,745 1.160 8,984 7,745 1.894 14,669 2017-2018 158,998 37 4,297 1.132 4,864 12,367 1.918 23,720 2018-2019 248,608 50 4,972 1.104 5,489 12,681 1.939 24,588 2019-2020 426,000 35 12,171 1.077 13,108 12,999 1.963 25,517 2020-2021 727,000 34 21,382 1.051 22,472 13,321 1.987 26,469 2021-2022 627,000 42 14,929 1.025 15,302 13,659 2.011 27,468 2022-2023 519,000 38 13,658 1.000 13,658 14,000 2.035 28,490 Average Limited Severity: $12,735
Average 16/17-20/21 Limited Severity: 10,983
Average 17/18-21/22 Limited Severity: 12,247
Selected Limited Severity: $14,000
Prior:

Notes:
(A) Selected average of results from Appendices A, B, and C. (B) Appendix D, Page 3, Column (C).
(C) (A) / (B).
(D) From Appendix E, Page 1, Column (J).
(E) (C) x (D).
(F) Selected Limited Severity / (D).
(G) Based on a Burr distribution, a mathematical model
of claim sizes.
(H) (F) x (G).

This exhibit shows the calculation of the historical average cost per claim, or severity. The observed average severity is used in the method shown on page 1 of this Appendix. 60 Appendix D

City of San Clemente - Liability
Frequency and Severity Method
Projection of Ultimate Claims
Reported Closed Selected Trended Trended
Accident Claim Claim Ultimate Payroll Claim Trend Claim Year Development Development Claims ($000,000) Frequency Factor Frequency (A) (B) (C) (D) (E) (F) (G)
2005-2006 37 37 37 19.8 1.865 0.710 1.324
2006-2007 29 29 29 20.0 1.449 0.725 1.051
2007-2008 50 50 50 20.5 2.433 0.740 1.800
2008-2009 41 41 41 21.6 1.900 0.755 1.435
2009-2010 33 33 33 20.9 1.581 0.769 1.216
2010-2011 49 48 49 19.6 2.494 0.785 1.958
2011-2012 31 31 31 19.9 1.561 0.801 1.250
2012-2013 40 40 40 19.8 2.021 0.817 1.651
2013-2014 45 45 45 19.5 2.303 0.834 1.921
2014-2015 33 33 33 19.1 1.726 0.851 1.469
2015-2016 35 35 35 18.6 1.885 0.868 1.636
2016-2017 35 35 35 18.7 1.869 0.886 1.656
2017-2018 37 38 37 19.3 1.917 0.904 1.733
2018-2019 50 52 50 20.2 2.474 0.922 2.281
2019-2020 35 34 35 21.2 1.648 0.942 1.552
2020-2021 34 30 34 18.5 1.838 0.961 1.766
2021-2022 41 43 42 18.5 2.272 0.980 2.227
2022-2023 26 28 38 18.5 2.055 1.000 2.055
Total 681 682 694 354.3 1.659
17/18-21/22 197 197 198 97.7 1.907
(H) Selected Frequency: 2.025
Prior:

Program Year: 2022-2023 2023-2024
(I) Trend Factor: 1.000 0.980
(J) Selected Frequency: 2.055 1.985
(K) Est. Payroll ($000,000): 18.5 19.0
(L) Ultimate Claims: 38 38
Notes:
(A) Appendix D, Page 4, (C). (G) (E) x (F).
(B) Appendix D, Page 5, (C). (H) The selected frequency of 2.025 is based on (G). (C) Selected from (A) and (B). (I) Appendix E, Page 1, Column (F). (D) Appendix K, Column (C) / 10,000. (J) (H) x (I). 2022-2023 is (L) / (K). (E) (C) / (D). (K) Appendix K, Column (C) / 10,000.
(F) Appendix E, Page 1, Column (F). (L) (J) x (K). 2022-2023 is (C).

This exhibit summarizes the estimated numbers of claims and shows the estimated frequencies per $1,000,000 of trended payroll. 61 Appendix D

City of San Clemente - Liability
Frequency and Severity Method
Reported Claim Count Development
Claims Reported
Reported Claim Trended
Accident as of Development Ultimate Claim
Year 12/31/2022 Factor Claims Frequency
(A) (B) (C) (D)
2005-2006 37 1.000 37 1.324
2006-2007 29 1.000 29 1.050
2007-2008 50 1.000 50 1.801
2008-2009 41 1.000 41 1.435
2009-2010 33 1.000 33 1.216
2010-2011 49 1.000 49 1.958
2011-2012 31 1.000 31 1.250
2012-2013 40 1.000 40 1.652
2013-2014 45 1.000 45 1.920
2014-2015 33 1.000 33 1.468
2015-2016 35 1.000 35 1.636
2016-2017 35 1.000 35 1.656
2017-2018 37 1.002 37 1.733
2018-2019 50 1.008 50 2.281
2019-2020 34 1.021 35 1.553
2020-2021 33 1.036 34 1.767
2021-2022 38 1.083 41 2.173
2022-2023 8 3.249 26 1.406
Total 658 681 1.623
Notes:
(A) Provided by the City.
(B) From Appendix D, Page 6.
(C) (A) x (B).
(D) (C) / [Appendix D, Page 3, (D)] x
[Appendix D, Page 3, (F)].

This exhibit shows the calculation of estimated ultimate claims for each year based on reported claims as provided by the City. These numbers of claims tend to "develop" or change from period to period as more claims are filed. This development tends to follow quantifiable patterns over time. 62 Appendix D

City of San Clemente - Liability
Frequency and Severity Method
Closed Claim Count Development
Claims Closed
Closed Claim Trended
Accident as of Development Ultimate Claim
Year 12/31/2022 Factor Claims Frequency
(A) (B) (C) (D)
2005-2006 37 1.000 37 1.324
2006-2007 29 1.000 29 1.050
2007-2008 50 1.000 50 1.801
2008-2009 41 1.000 41 1.435
2009-2010 33 1.000 33 1.216
2010-2011 48 1.000 48 1.918
2011-2012 31 1.000 31 1.250
2012-2013 40 1.000 40 1.652
2013-2014 45 1.000 45 1.920
2014-2015 33 1.002 33 1.468
2015-2016 35 1.006 35 1.636
2016-2017 34 1.015 35 1.656
2017-2018 37 1.026 38 1.780
2018-2019 50 1.041 52 2.372
2019-2020 32 1.069 34 1.508
2020-2021 27 1.128 30 1.559
2021-2022 32 1.337 43 2.279
2022-2023 3 9.426 28 1.514
Total 637 682 1.626
Notes:
(A) Provided by the City.
(B) From Appendix D, Page 7.
(C) (A) x (B).
(D) (C) / [Appendix D, Page 3, (D)] x
[Appendix D, Page 3, (F)].

This exhibit shows the calculation of estimated ultimate claims for each year based on closed claims as provided by the City. These numbers of closed claims tend to "develop" or change from period to period as more claims are closed. This development tends to follow quantifiable patterns over time. 63 Appendix D

City of San Clemente - Liability
Reported Claim Count Development
Claims Reported as of:

Accident 6 18 30 42 54 66 78 90 102 114 126 138 150 162 Year Months Months Months Months Months Months Months Months Months Months Months Months Months Months 2001-2002
2002-2003
2003-2004
2004-2005
2005-2006 37
2006-2007 29 29
2007-2008 50 50 50
2008-2009 41 41 41 41
2009-2010 33 33 33 33 33
2010-2011 49 49 49 49 49
2011-2012 31 31 31 31 31
2012-2013 40 40 40 40 40
2013-2014 45 45 45 45 45
2014-2015 32 33 33 33 33
2015-2016 35 35 35 35 35
2016-2017 34 35 35 35 35
2017-2018 35 36 36 37 37
2018-2019 15 48 49 49 50
2019-2020 12 32 33 34
2020-2021 6 30 33
2021-2022 16 38
2022-2023 8
Reported Claim Count Development Factors:
6-18 18-30 30-42 42-54 54-66 66-78 78-90 90-102 102-114 114-126 126-138 138-150 150-162 162-174 Months Months Months Months Months Months Months Months Months Months Months Months Months Months 2001-2002
2002-2003
2003-2004
2004-2005
2005-2006 1.000
2006-2007 1.000 1.000
2007-2008 1.000 1.000 1.000
2008-2009 1.000 1.000 1.000 1.000
2009-2010 1.000 1.000 1.000 1.000
2010-2011 1.000 1.000 1.000 1.000
2011-2012 1.000 1.000 1.000 1.000
2012-2013 1.000 1.000 1.000 1.000
2013-2014 1.000 1.000 1.000 1.000
2014-2015 1.031 1.000 1.000 1.000
2015-2016 1.000 1.000 1.000 1.000
2016-2017 1.029 1.000 1.000 1.000
2017-2018 1.029 1.000 1.028 1.000
2018-2019 3.200 1.021 1.000 1.020
2019-2020 2.667 1.031 1.030
2020-2021 5.000 1.100
2021-2022 2.375
6-18 18-30 30-42 42-54 54-66 66-78 78-90 90-102 102-114 114-126 126-138 138-150 150-162 162-174 Months Months Months Months Months Months Months Months Months Months Months Months Months Months Average 3.311 1.045 1.015 1.012 1.008 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Claim-Wtd. Avgs.

Total 3.020 1.041 1.013 1.013 1.007 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 3-yr 2.941 1.045 1.008 1.017 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 4-yr 3.020 1.041 1.013 1.013 1.007 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Comparative
Factors 2.653 1.144 1.017 1.010 1.006 1.004 1.005 1.004 1.003 1.003 1.003 1.002 1.003 1.002 Prior 0.000 1.100 1.007 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Selected 3.000 1.045 1.015 1.013 1.006 1.002 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Cumulated 3.249 1.083 1.036 1.021 1.008 1.002 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 64 Appendix D

City of San Clemente - Liability
Closed Claim Development
Claims Closed as of:

Accident 6 18 30 42 54 66 78 90 102 114 126 138 150 162 Year Months Months Months Months Months Months Months Months Months Months Months Months Months Months 2001-2002
2002-2003
2003-2004
2004-2005
2005-2006 37
2006-2007 29 29
2007-2008 50 50 50
2008-2009 41 41 41 41
2009-2010 33 33 33 33 33
2010-2011 48 48 48 48 48
2011-2012 31 31 31 31 31
2012-2013 40 40 40 40 40
2013-2014 44 45 45 45 45
2014-2015 28 30 33 33 33
2015-2016 34 35 35 35 35
2016-2017 32 33 34 34 34
2017-2018 31 35 36 37 37
2018-2019 5 42 46 49 50
2019-2020 2 26 30 32
2020-2021 2 20 27
2021-2022 8 32
2022-2023 3
Closed Claim Count Development Factors:
6-18 18-30 30-42 42-54 54-66 66-78 78-90 90-102 102-114 114-126 126-138 138-150 150-162 162-174 Months Months Months Months Months Months Months Months Months Months Months Months Months Months 2001-2002
2002-2003
2003-2004
2004-2005
2005-2006 1.000
2006-2007 1.000 1.000
2007-2008 1.000 1.000 1.000
2008-2009 1.000 1.000 1.000 1.000
2009-2010 1.000 1.000 1.000 1.000
2010-2011 1.000 1.000 1.000 1.000
2011-2012 1.000 1.000 1.000 1.000
2012-2013 1.000 1.000 1.000 1.000
2013-2014 1.023 1.000 1.000 1.000
2014-2015 1.071 1.100 1.000 1.000
2015-2016 1.029 1.000 1.000 1.000
2016-2017 1.031 1.030 1.000 1.000
2017-2018 1.129 1.029 1.028 1.000
2018-2019 8.400 1.095 1.065 1.020
2019-2020 13.000 1.154 1.067
2020-2021 10.000 1.350
2021-2022 4.000
6-18 18-30 30-42 42-54 54-66 66-78 78-90 90-102 102-114 114-126 126-138 138-150 150-162 162-174 Months Months Months Months Months Months Months Months Months Months Months Months Months Months Average 8.850 1.182 1.048 1.027 1.018 1.031 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Claim-Wtd. Avgs.

Total 7.059 1.160 1.049 1.026 1.015 1.028 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 3-yr 6.500 1.170 1.054 1.025 1.000 1.030 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 4-yr 7.059 1.160 1.049 1.026 1.015 1.028 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Comparative
Factors 3.720 1.528 1.096 1.038 1.019 1.011 1.009 1.008 1.008 1.006 1.004 1.005 1.004 1.004 Prior 0.000 1.600 1.080 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Selected 7.050 1.185 1.055 1.027 1.015 1.011 1.009 1.004 1.002 1.000 1.000 1.000 1.000 1.000 Cumulated 9.426 1.337 1.128 1.069 1.041 1.026 1.015 1.006 1.002 1.000 1.000 1.000 1.000 1.000 65 Appendix E

City of San Clemente - Liability
Loss Trend Factors
Factor to Factor to Factor to Factor to Factor to Factor to Factor to Factor to Factor to Benefit 2022-2023 2023-2024 2024-2025 2025-2026 2022-2023 2023-2024 2024-2025 2025-2026 2022-2023 Accident Level Loss Rate Loss Rate Loss Rate Loss Rate Frequency Frequency Frequency Frequency Severity Year Factor Level Level Level Level Level Level Level Level Level (A) (B) (C) (D) (E) (F) (G) (H) (I) (J)
2001-2002 1.000 1.107 1.113 1.118 1.124 0.655 0.642 0.629 0.616 1.679 2002-2003 1.000 1.101 1.107 1.112 1.118 0.668 0.655 0.642 0.629 1.638 2003-2004 1.000 1.096 1.101 1.106 1.112 0.682 0.669 0.655 0.642 1.598 2004-2005 1.000 1.090 1.095 1.100 1.106 0.696 0.682 0.668 0.655 1.559 2005-2006 1.000 1.084 1.089 1.095 1.100 0.710 0.696 0.682 0.668 1.521 2006-2007 1.000 1.079 1.084 1.090 1.095 0.725 0.710 0.696 0.682 1.484 2007-2008 1.000 1.074 1.079 1.085 1.090 0.740 0.725 0.710 0.696 1.448 2008-2009 1.000 1.069 1.074 1.080 1.085 0.755 0.740 0.724 0.710 1.412 2009-2010 1.000 1.064 1.069 1.075 1.080 0.769 0.754 0.739 0.724 1.378 2010-2011 1.000 1.059 1.064 1.070 1.075 0.785 0.770 0.754 0.739 1.344 2011-2012 1.000 1.054 1.059 1.065 1.070 0.801 0.785 0.769 0.754 1.312 2012-2013 1.000 1.049 1.054 1.060 1.065 0.817 0.801 0.785 0.769 1.280 2013-2014 1.000 1.044 1.050 1.055 1.060 0.834 0.818 0.801 0.785 1.249 2014-2015 1.000 1.039 1.045 1.050 1.055 0.851 0.834 0.817 0.801 1.218 2015-2016 1.000 1.034 1.040 1.045 1.050 0.868 0.851 0.834 0.817 1.188 2016-2017 1.000 1.030 1.035 1.040 1.045 0.886 0.869 0.851 0.834 1.160 2017-2018 1.000 1.025 1.030 1.035 1.040 0.904 0.886 0.868 0.851 1.132 2018-2019 1.000 1.020 1.025 1.030 1.035 0.922 0.904 0.886 0.868 1.104 2019-2020 1.000 1.015 1.020 1.025 1.030 0.942 0.923 0.904 0.886 1.077 2020-2021 1.000 1.010 1.015 1.020 1.025 0.961 0.942 0.922 0.904 1.051 2021-2022 1.000 1.005 1.010 1.015 1.020 0.980 0.960 0.941 0.922 1.025 2022-2023 1.000 1.000 1.005 1.010 1.015 1.000 0.980 0.960 0.941 1.000 2023-2024 1.000 -- 1.000 1.005 1.010 -- 1.000 0.980 0.960 -- 2024-2025 1.000 -- -- 1.000 1.005 -- -- 1.000 0.980 --
2025-2026 1.000 -- -- -- 1.000 -- -- -- 1.000 --
Notes:
(A) No benefit level adjustment applied.
(B) - (E) (A) adjusted for a 0.5% annual loss rate trend. (F) - (I) (A) adjusted for a -2.0% annual frequency trend. (J) (A) adjusted for a 2.5% annual severity trend.

This exhibit shows the calculation of the ways in which we expect claims costs to have changed over the past twenty years due to changes in inflation.
66 Appendix E

City of San Clemente - Liability
Residual Trend Factors
Initial
Estimate of
Ultimate Ultimate Adjusted Trended
Accident Limited Reported Limited Payroll Ultimate
Year Losses Claims BLF Severity ($00) Frequency
(A) (B) (C) (D) (E) (F)
2001-2002 0 1.000
2002-2003 0 1.000
2003-2004 0 1.000
2004-2005 0 1.000
2005-2006 38,028 37 1.000 1,028 198,386 1.865
2006-2007 370,580 29 1.000 12,779 200,199 1.449
2007-2008 187,085 50 1.000 3,742 205,491 2.433
2008-2009 761,721 41 1.000 18,579 215,752 1.900
2009-2010 519,101 33 1.000 15,730 208,696 1.581
2010-2011 272,478 49 1.000 5,561 196,436 2.494
2011-2012 335,387 31 1.000 10,819 198,618 1.561
2012-2013 272,990 40 1.000 6,825 197,878 2.021
2013-2014 177,158 45 1.000 3,937 195,422 2.303
2014-2015 734,563 33 1.000 22,259 191,245 1.726
2015-2016 266,931 35 1.000 7,627 185,721 1.885
2016-2017 271,070 35 1.000 7,745 187,312 1.869
2017-2018 158,998 37 1.000 4,297 193,028 1.917
2018-2019 248,608 50 1.000 4,972 202,100 2.474
2019-2020 426,000 35 1.000 12,171 212,341 1.648
2020-2021 727,000 34 1.000 21,382 184,958 1.838
2021-2022 627,000 42 1.000 14,929 184,893 2.272
Severity Trend Factors Frequency Trend Factors
Latest 10 x 2021-2022 1.040 1.004
Mvg 5-Yr Wtd Latest 10 x 2021-2022 0.980 0.999
Latest 5 x 2021-2022 1.360 0.982
Mvg 5-Yr Wtd Latest 5 x 2021-2022 0.989 0.999
Prior 1.025 0.980
Default 1.030 0.975
Selected Residual Trend 1.025 0.980
Notes:
(A) Selected average of results from Appendices A and B. (B) Appendix D, Page 3, Column (C).
(C) Appendix E, Page 1, Column (A).
(D) (A) x (C) / (B).
(E) Appendix K, Column (C).
(F) (B) / (E) x 10,000.
67 Appendix F

City of San Clemente - Liability
Payment and Reserve Forecast
Calendar Period
1/1/2023 7/1/2023
As of to to
Accident Year 12/31/2022 6/30/2023 6/30/2024
Prior
Ultimate Loss $38,028 $38,028 $38,028
Paid in Calendar Period -
Paid to Date 38,028 38,028 38,028
Outstanding Liability
2006-2007
Ultimate Loss $738,196 $738,196 $738,196
Paid in Calendar Period -
Paid to Date 738,196 738,196 738,196
Outstanding Liability
2007-2008
Ultimate Loss $337,085 $337,085 $337,085
Paid in Calendar Period -
Paid to Date 337,085 337,085 337,085
Outstanding Liability
2008-2009
Ultimate Loss $1,361,721 $1,361,721 $1,361,721
Paid in Calendar Period -
Paid to Date 1,361,721 1,361,721 1,361,721
Outstanding Liability
2009-2010
Ultimate Loss $844,729 $844,729 $844,729
Paid in Calendar Period -
Paid to Date 844,729 844,729 844,729
Outstanding Liability
2010-2011
Ultimate Loss $572,478 $572,478 $572,478
Paid in Calendar Period -
Paid to Date 572,478 572,478 572,478
Outstanding Liability
2011-2012
Ultimate Loss $427,370 $427,370 $427,370
Paid in Calendar Period -
Paid to Date 427,370 427,370 427,370
Outstanding Liability
2012-2013
Ultimate Loss $572,990 $572,990 $572,990
Paid in Calendar Period -
Paid to Date 572,990 572,990 572,990
Outstanding Liability
68 Appendix F

City of San Clemente - Liability
Payment and Reserve Forecast
Calendar Period
1/1/2023 7/1/2023
As of to to
Accident Year 12/31/2022 6/30/2023 6/30/2024
2013-2014
Ultimate Loss $327,158 $327,158 $327,158
Paid in Calendar Period -
Paid to Date 327,158 327,158 327,158
Outstanding Liability
2014-2015
Ultimate Loss $1,427,034 $1,427,034 $1,427,034
Paid in Calendar Period -
Paid to Date 1,427,034 1,427,034 1,427,034
Outstanding Liability
2015-2016
Ultimate Loss $420,423 $420,423 $420,423
Paid in Calendar Period -
Paid to Date 420,423 420,423 420,423
Outstanding Liability
2016-2017
Ultimate Loss $440,266 $440,266 $440,266
Paid in Calendar Period -
Paid to Date 440,266 440,266 440,266
Outstanding Liability
2017-2018
Ultimate Loss $158,998 $158,998 $158,998
Paid in Calendar Period -
Paid to Date 158,998 158,998 158,998
Outstanding Liability
2018-2019
Ultimate Loss $548,608 $548,608 $548,608
Paid in Calendar Period -
Paid to Date 548,608 548,608 548,608
Outstanding Liability
2019-2020
Ultimate Loss $686,000 $686,000 $686,000
Paid in Calendar Period - 37,748 57,398
Paid to Date 536,799 574,547 631,945
Outstanding Liability 149,201 111,453 54,055
2020-2021
Ultimate Loss $1,576,000 $1,576,000 $1,576,000
Paid in Calendar Period - 157,626 266,581
Paid to Date 832,481 990,107 1,256,688
Outstanding Liability 743,519 585,893 319,312
69 Appendix F

City of San Clemente - Liability
Payment and Reserve Forecast
Calendar Period
1/1/2023 7/1/2023
As of to to
Accident Year 12/31/2022 6/30/2023 6/30/2024
2021-2022
Ultimate Loss $1,256,000 $1,256,000 $1,256,000
Paid in Calendar Period - 142,315 291,863
Paid to Date 267,704 410,019 701,882
Outstanding Liability 988,296 845,981 554,118
2022-2023
Ultimate Loss $587,000 $1,173,000 $1,173,000
Paid in Calendar Period - 85,564 230,348
Paid to Date 891 86,455 316,803
Outstanding Liability 586,109 1,086,545 856,197
2023-2024
Ultimate Loss - - $1,294,000
Paid in Calendar Period - - 113,872
Paid to Date - - 113,872
Outstanding Liability - - 1,180,128
Totals
Ultimate Loss $12,320,084 $12,906,084 $14,200,084
Paid in Calendar Period - 423,253 960,062
Paid to Date 9,852,959 10,276,212 11,236,274
Outstanding Liability 2,467,125 2,629,872 2,963,810
Total Outstanding ULAE 0 0 0
Outstanding Liability
plus ULAE 2,467,125 2,629,872 2,963,810
Notes appear on the next page.
70 Appendix F

City of San Clemente - Liability
Payment and Reserve Forecast
Notes to previous page:
· Accident Year is associated with date of loss. Calendar Period is associated with date of transaction. For example, for the losses which occurred during 2020-2021, $157,626 is expected to be paid between 1/1/23 and 6/30/23, $990,107 will have been paid by 6/30/23, and the reserve for remaining payments on these claims should be $585,893. · Ultimate Losses for each accident year are from Exhibit 3, Page 1. · Paid in Calendar Period is a proportion of the Outstanding Liability from the previous calendar period. These proportions are derived from the paid loss development pattern selected in Appendix B. For example, $266,581 = $585,893 x 45.5%. · Paid to Date is Paid in Calendar Period plus Paid to Date from previous calendar period. For example, $1,256,688 = $266,581 + $990,107. · Outstanding Liability is Ultimate Loss minus Paid to Date. For example, $585,893 = $1,576,000 - $990,107.

This exhibit shows the calculation of the liability for outstanding claims as of the date of evaluation, the end of the current fiscal year, and the end of the coming fiscal year. It also shows the expected claims payout during the remainder of the current fiscal year and the coming fiscal year. Refer to the Totals at the end of the exhibit for the balance sheet information. The top parts of the exhibit show information for each program year. 71 Appendix G

City of San Clemente - Liability
Discount Factors to be Applied to Overall Reserves
Full Value Discounted Full Value Discounted
Accident of Reserve Discount Reserve of Reserve Discount Reserve Year at 12/31/22 Factor at 12/31/22 at 6/30/23 Factor at 6/30/23 (A) (B) (C) (D) (E) (F)
2019-2020 149,201 0.973 145,114 111,453 0.974 108,576
2020-2021 743,519 0.968 719,804 585,893 0.971 568,922
2021-2022 988,296 0.960 949,120 845,981 0.965 816,518
2022-2023 586,109 0.949 555,937 1,086,545 0.956 1,038,246 Totals $2,467,125 $2,369,975 $2,629,872 $2,532,262
(G) Discount Factor at 12/31/22 for Overall Reserve: 0.961 (H) Discount Factor at 6/30/23 for Overall Reserve: 0.963 Notes:
(A) From Appendix F, Outstanding Liability at 12/31/22. (B) Based on Appendix G, Page 2, Column (F).
(C) (A) x (B).
(D) From Appendix F, Outstanding Liability at 6/30/23.
(E) Based on Appendix G, Page 2, Column (F).
(F) (D) x (E).
(G) Total of (C) / Total of (A).
(H) Total of (F) / Total of (D).

This exhibit shows the expected impact of anticipated investment income on the liability for outstanding claims at the date of evaluation and the end of the current fiscal year. For example, if the discount factor in item (G) is 0.961, the discounted liability for outstanding claims is 96.1% of the full value.
72 Appendix G

City of San Clemente - Liability
Calculation of Discount Factors
Payment Payment Return on Discounted Undiscounted Discount Year Pattern Investment Reserves Reserves Factor
(A) (B) (C) (D) (E) (F)
22 0.0% 2.00% 0.000 0.000 1.000
21 0.0% 2.00% 0.000 0.000 1.000
20 0.0% 2.00% 0.000 0.000 1.000
19 0.0% 2.00% 0.000 0.000 1.000
18 0.0% 2.00% 0.000 0.000 1.000
17 0.0% 2.00% 0.000 0.000 1.000
16 0.0% 2.00% 0.000 0.000 1.000
15 0.0% 2.00% 0.000 0.000 1.000
14 0.0% 2.00% 0.000 0.000 1.000
13 0.0% 2.00% 0.000 0.000 1.000
12 0.0% 2.00% 0.000 0.000 1.000
11 0.2% 2.00% 0.002 0.002 0.990
10 0.3% 2.00% 0.005 0.005 0.982
9 0.7% 2.00% 0.012 0.012 0.979
8 1.1% 2.00% 0.022 0.022 0.974
7 3.4% 2.00% 0.055 0.057 0.976
6 7.4% 2.00% 0.127 0.130 0.976
5 13.4% 2.00% 0.257 0.264 0.974
4 21.4% 2.00% 0.464 0.478 0.970
3 24.6% 2.00% 0.698 0.724 0.965
2 19.0% 2.00% 0.872 0.914 0.955
1 8.6% 2.00% 0.941 1.000 0.941
(G) Discount Factor for Future Funding: 2022-2023 0.950 2023-2024 0.950
Notes:
(A) This is the year of payment relative to the accident year. For example, year 7 refers to payments made in the seventh year after the inception of the accident year. We assume that payments are made at midyear.
(B) Percent of ultimate loss paid this year. This payment pattern is based on the paid loss development pattern selected in Appendix B, Page 2.
(C) Assumed Investment Income Rates.
(D) Discounted Reserves at the beginning of this year is next year's Discounted Reserves discounted one year plus this year's payments discounted six months. For example, in year 2,

87.2% = [69.8% / 1.020] + [19.0% / (1.010)].
(E) Summation of future (B) values. This is the percent of ultimate loss unpaid at the beginning of the year. (F) (D) / (E).
(G) (F) at year 1, with interest accumulated for six months. We assume that the required funding is deposited at the middle of the first year.

This exhibit shows the calculation of the effect of anticipated investment income on future claims costs. Thus, if the discount factor in item (F) is 0.95, on a discounted basis, $0.95 must be budgeted for every $1 that will actually be paid on claims that will be incurred in the next fiscal year. 73 Appendix H
City of San Clemente - Liability
Confidence Level Table
Probability Projected Losses Outstanding Losses
95% 1.951 1.593
90% 1.667 1.421
85% 1.496 1.317
80% 1.368 1.239
75% 1.266 1.176
70% 1.180 1.122
65% 1.104 1.075
60% 1.035 1.031
55% 0.972 0.991
50% 0.913 0.953
45% 0.856 0.917
40% 0.801 0.881
35% 0.747 0.846
30% 0.692 0.810
25% 0.637 0.772
To read table: For the above retention, there is a 90% chance that final loss settlements will be less than

1.667 times the average expected amount of losses.

This exhibit shows the loads that must be applied to bring estimated losses at the expected level to the various indicated confidence levels. 74 Appendix I
City of San Clemente - Liability
Program History
Policy Policy Self-Insured Retention
Year Year Policy Per
Start Date End Date Year Occurrence Aggregate
7/1/2005 6/30/2006 2005-2006 250,000 (none)
7/1/2006 6/30/2007 2006-2007 250,000 (none)
7/1/2007 6/30/2008 2007-2008 250,000 (none)
7/1/2008 6/30/2009 2008-2009 250,000 (none)
7/1/2009 6/30/2010 2009-2010 250,000 (none)
7/1/2010 6/30/2011 2010-2011 250,000 (none)
7/1/2011 6/30/2012 2011-2012 250,000 (none)
7/1/2012 6/30/2013 2012-2013 250,000 (none)
7/1/2013 6/30/2014 2013-2014 250,000 (none)
7/1/2014 6/30/2015 2014-2015 250,000 (none)
7/1/2015 6/30/2016 2015-2016 250,000 (none)
7/1/2016 6/30/2017 2016-2017 250,000 (none)
7/1/2017 6/30/2018 2017-2018 250,000 (none)
7/1/2018 6/30/2019 2018-2019 250,000 (none)
7/1/2019 6/30/2020 2019-2020 250,000 (none)
7/1/2020 6/30/2021 2020-2021 250,000 (none)
7/1/2021 6/30/2022 2021-2022 250,000 (none)
7/1/2022 6/30/2023 2022-2023 250,000 (none)
7/1/2023 6/30/2024 2023-2024 250,000 (none)
Third Party
Claims Begin End
Administrator Date Date
Current
This exhibit summarizes some of the key facts about the history of the program. 75 Appendix J

City of San Clemente - Liability
Incurred Losses as of 12/31/22
Incurred Incurred
Additions Subtractions Incurred Incurred $100,000 Incurred Capped at Accident Unlimited to from Adjusted Incurred Over Capped at to $250,000 Capped at $250,000 & Year Incurred Losses Losses Incurred Over $250,000 $100,000 $100,000 Layer $250,000 Aggregate (A) (B) (C) (D) (E) (F) (G) (H) (I) (J) (K)
2005-2006 38,028 0 0 38,028 0 0 38,028 0 38,028 38,028
2006-2007 2,695,012 0 9,243 2,685,769 1,947,573 2,315,189 370,580 367,616 738,196 738,196 2007-2008 1,579,956 0 2,000 1,577,956 1,240,871 1,390,871 187,085 150,000 337,085 337,085 2008-2009 1,751,679 0 33,090 1,718,589 356,868 956,868 761,721 600,000 1,361,721 1,361,721 2009-2010 3,222,282 0 0 3,222,282 2,377,552 2,703,181 519,101 325,629 844,729 844,729 2010-2011 17,116,245 0 294 17,115,951 16,543,472 16,843,472 272,478 300,000 572,478 572,478 2011-2012 435,808 0 8,439 427,370 0 91,983 335,387 91,983 427,370 427,370 2012-2013 2,111,804 0 0 2,111,804 1,538,813 1,838,813 272,990 300,000 572,990 572,990 2013-2014 498,870 0 27,500 471,370 144,212 294,212 177,158 150,000 327,158 327,158 2014-2015 2,950,737 0 132,279 2,818,458 1,391,424 2,083,895 734,563 692,470 1,427,034 1,427,034 2015-2016 651,125 0 0 651,125 230,703 384,194 266,931 153,492 420,423 420,423 2016-2017 940,978 0 0 940,978 500,712 669,908 271,070 169,196 440,266 440,266 2017-2018 158,998 0 0 158,998 0 0 158,998 0 158,998 158,998 2018-2019 741,661 0 0 741,661 193,053 493,053 248,608 300,000 548,608 548,608 2019-2020 904,833 0 275,000 629,833 0 208,958 420,875 208,958 629,833 629,833 2020-2021 3,428,186 0 14,695 3,413,492 1,992,182 2,721,115 692,377 728,933 1,421,309 1,421,309 2021-2022 817,677 0 0 817,677 50,000 350,000 467,677 300,000 767,677 767,677 2022-2023 54,491 0 0 54,491 0 0 54,491 0 54,491 54,491
Total $40,098,371 $0 $502,540 $39,595,831 $28,507,436 $33,345,712 $6,250,119 $4,838,276 $11,088,394 $11,088,394 Notes:
(A) Years are 7/1 to 6/30.
(B) Provided by the City.
(C)
(D) Subrogation recoveries.
(E) (B) + (C) - (D).
(F) Sum of incurred losses in excess of $250,000.
(G) Sum of incurred losses in excess of $100,000.
(H) (E) - (G).
(I) (G) - (F).
(J) (E) - (F).
(K) Minimum of (J) and the aggregate stop loss. See Appendix I. 76 Appendix J

City of San Clemente - Liability
Paid Losses as of 12/31/22
Paid Paid
Additions Subtractions Paid Paid $100,000 Paid Capped at Accident Unlimited to from Adjusted Paid Over Capped at to $250,000 Capped at $250,000 & Year Paid Losses Losses Paid Over $250,000 $100,000 $100,000 Layer $250,000 Aggregate (A) (B) (C) (D) (E) (F) (G) (H) (I) (J) (K)
2005-2006 38,028 0 0 38,028 0 0 38,028 0 38,028 38,028
2006-2007 2,695,012 0 9,243 2,685,769 1,947,573 2,315,189 370,580 367,616 738,196 738,196 2007-2008 1,579,956 0 2,000 1,577,956 1,240,871 1,390,871 187,085 150,000 337,085 337,085 2008-2009 1,751,679 0 33,090 1,718,589 356,868 956,868 761,721 600,000 1,361,721 1,361,721 2009-2010 3,222,282 0 0 3,222,282 2,377,552 2,703,181 519,101 325,629 844,729 844,729 2010-2011 13,660,949 0 294 13,660,655 13,088,177 13,388,177 272,478 300,000 572,478 572,478 2011-2012 435,808 0 8,439 427,370 0 91,983 335,387 91,983 427,370 427,370 2012-2013 2,111,804 0 0 2,111,804 1,538,813 1,838,813 272,990 300,000 572,990 572,990 2013-2014 498,870 0 27,500 471,370 144,212 294,212 177,158 150,000 327,158 327,158 2014-2015 2,950,737 0 132,279 2,818,458 1,391,424 2,083,895 734,563 692,470 1,427,034 1,427,034 2015-2016 651,125 0 0 651,125 230,703 384,194 266,931 153,492 420,423 420,423 2016-2017 900,613 0 0 900,613 460,347 629,543 271,070 169,196 440,266 440,266 2017-2018 158,998 0 0 158,998 0 0 158,998 0 158,998 158,998 2018-2019 741,661 0 0 741,661 193,053 493,053 248,608 300,000 548,608 548,608 2019-2020 811,799 0 275,000 536,799 0 170,546 366,253 170,546 536,799 536,799 2020-2021 1,189,269 0 14,695 1,174,574 342,093 737,329 437,245 395,236 832,481 832,481 2021-2022 267,704 0 0 267,704 0 103,728 163,976 103,728 267,704 267,704 2022-2023 891 0 0 891 0 0 891 0 891 891
Total $33,667,186 $0 $502,540 $33,164,646 $23,311,687 $27,581,583 $5,583,063 $4,269,896 $9,852,959 $9,852,959 Notes:
(A) Years are 7/1 to 6/30.
(B) Provided by the City.
(C)
(D) Subrogation recoveries.
(E) (B) + (C) - (D).
(F) Sum of paid losses in excess of $250,000.
(G) Sum of paid losses in excess of $100,000.
(H) (E) - (G).
(I) (G) - (F).
(J) (E) - (F).
(K) Minimum of (J) and the aggregate stop loss. See Appendix I. 77 Appendix J

City of San Clemente - Liability
Case Reserves as of 12/31/22
Reserves Reserves
Additions Subtractions Reserves Reserves $100,000 Reserves Capped at Accident Unlimited to from Adjusted Reserves Over Capped at to $250,000 Capped at $250,000 & Year Reserves Losses Losses Reserves Over $250,000 $100,000 $100,000 Layer $250,000 Aggregate (A) (B) (C) (D) (E) (F) (G) (H) (I) (J) (K)
2005-2006 0 0 0 0 0 0 0 0 0 0
2006-2007 0 0 0 0 0 0 0 0 0 0
2007-2008 0 0 0 0 0 0 0 0 0 0
2008-2009 0 0 0 0 0 0 0 0 0 0
2009-2010 0 0 0 0 0 0 0 0 0 0
2010-2011 3,455,296 0 0 3,455,296 3,455,296 3,455,296 0 0 0 0 2011-2012 0 0 0 0 0 0 0 0 0 0
2012-2013 0 0 0 0 0 0 0 0 0 0
2013-2014 0 0 0 0 0 0 0 0 0 0
2014-2015 0 0 0 0 0 0 0 0 0 0
2015-2016 0 0 0 0 0 0 0 0 0 0
2016-2017 40,365 0 0 40,365 40,365 40,365 0 0 0 0
2017-2018 0 0 0 0 0 0 0 0 0 0
2018-2019 0 0 0 0 0 0 0 0 0 0
2019-2020 93,034 0 0 93,034 0 38,412 54,622 38,412 93,034 93,034 2020-2021 2,238,917 0 0 2,238,917 1,650,089 1,983,785 255,132 333,696 588,828 588,828 2021-2022 549,973 0 0 549,973 50,000 246,272 303,702 196,272 499,973 499,973 2022-2023 53,600 0 0 53,600 0 0 53,600 0 53,600 53,600
Total $6,431,185 $0 $0 $6,431,185 $5,195,750 $5,764,129 $667,056 $568,380 $1,235,435 $1,235,435 Notes:
(A) Years are 7/1 to 6/30.
(B) Appendix J, Page 1, Column (B) - Appendix J, Page 2, Column (B). (C) Appendix J, Page 1, Column (C) - Appendix J, Page 2, Column (C). (D) Appendix J, Page 1, Column (D) - Appendix J, Page 2, Column (D). (E) (B) + (C) - (D).
(F) Sum of case reserves in excess of $250,000.
(G) Sum of case reserves in excess of $100,000.
(H) (E) - (G).
(I) (G) - (F).
(J) (E) - (F).
(K) Minimum of (J) and the aggregate stop loss. See Appendix I. 78 Appendix J

City of San Clemente - Liability
Claim Counts as of 12/31/22
Additions Subtractions Additions Subtractions
to from Adjusted to from Adjusted Adjusted
Accident Reported Reported Reported Reported Closed Closed Closed Closed Open Open Year Claims Claims Claims Claims Claims Claims Claims Claims Claims Claims (A) (B) (C) (D) (E) (F) (G) (H) (I) (J) (K)
2005-2006 37 0 0 37 37 0 0 37 0 0
2006-2007 29 0 0 29 29 0 0 29 0 0
2007-2008 50 0 0 50 50 0 0 50 0 0
2008-2009 41 0 0 41 41 0 0 41 0 0
2009-2010 33 0 0 33 33 0 0 33 0 0
2010-2011 49 0 0 49 48 0 0 48 1 1
2011-2012 31 0 0 31 31 0 0 31 0 0
2012-2013 40 0 0 40 40 0 0 40 0 0
2013-2014 45 0 0 45 45 0 0 45 0 0
2014-2015 33 0 0 33 33 0 0 33 0 0
2015-2016 35 0 0 35 35 0 0 35 0 0
2016-2017 35 0 0 35 34 0 0 34 1 1
2017-2018 37 0 0 37 37 0 0 37 0 0
2018-2019 50 0 0 50 50 0 0 50 0 0
2019-2020 34 0 0 34 32 0 0 32 2 2
2020-2021 33 0 0 33 27 0 0 27 6 6
2021-2022 38 0 0 38 32 0 0 32 6 6
2022-2023 8 0 0 8 3 0 0 3 5 5
Total 658 0 0 658 637 0 0 637 21 21
Notes:
(A) Years are 7/1 to 6/30.
(B) Provided by the City.
(C)
(D)
(E) (B) + (C) - (D).
(F) Provided by the City.
(G)
(H)
(I) (F) + (G) - (H).
(J) (B) - (F).
(K) (E) - (I).
79 Appendix K
City of San Clemente - Liability
Exposure Measures
Total Inflation Trended
Accident Payroll Trend Payroll
Year ($00) Factor ($00)
(A) (B) (C)
2001-2002 91,633 1.679 153,852
2002-2003 98,524 1.638 161,382
2003-2004 114,716 1.598 183,316
2004-2005 116,362 1.559 181,408
2005-2006 130,431 1.521 198,386
2006-2007 134,905 1.484 200,199
2007-2008 141,914 1.448 205,491
2008-2009 152,691 1.413 215,752
2009-2010 151,339 1.379 208,696
2010-2011 146,049 1.345 196,436
2011-2012 151,386 1.312 198,618
2012-2013 154,592 1.280 197,878
2013-2014 156,463 1.249 195,422
2014-2015 156,887 1.219 191,245
2015-2016 156,199 1.189 185,721
2016-2017 161,476 1.160 187,312
2017-2018 170,519 1.132 193,028
2018-2019 183,062 1.104 202,100
2019-2020 197,160 1.077 212,341
2020-2021 175,983 1.051 184,958
2021-2022 180,383 1.025 184,893
2022-2023 184,893 1.000 184,893
2023-2024 189,515 1.000 189,515
Notes:
(A) Provided by the City.
(B) Based on industry factors.
(C) (A) x (B).
80