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LION <br />Introduction <br />Aon Risk Insurance Services West, Inc. (AON) is pleased to submit this proposal to provide services to <br />the City of Santa Ana (Client) for actuarial services for its self -insured workers compensation and <br />liability programs. <br />The broad scope of work is to develop estimated outstanding liabilities and funding amounts for future <br />fiscal years. This will provide important data for financial audit statements (including Governmental <br />Accounting Standards Board [GASB] Statement No. 10 compliance) and strategic long-range planning. <br />The conclusions of our work will be provided in a written report. The report will have an executive <br />summary designed to be easily understood by non -actuaries. It will contain a technical section with <br />sufficient information to support all conclusions and to facilitate future analysis. <br />Scope of Work <br />The following is our understanding of the ultimate goals of the project and will serve as a Scope of Work: <br />1. Estimate Outstanding Losses. Estimate outstanding losses (including allocated loss adjustment <br />expenses [ALAE] and unallocated loss adjustment expenses [ULAE]) as of June 30, 2023. <br />The estimated outstanding losses are the cost of unpaid claims. The estimated outstanding losses <br />include case reserves, the development of known claims and incurred but not reported (IBNR) claims. <br />ALAE are the direct settlement expenses for specific claims, primarily legal expenses. ULAE are general <br />claims administration expenses. The estimated outstanding losses will be provided in both discounted <br />and undiscounted basis, based on the discount rate provided by the Client. <br />2. Project Ultimate Limited Losses. Project ultimate limited losses (including ALAE) for 2023/24 through <br />2024/25 <br />The projected ultimate limited losses are the accrual value of losses with accident dates in 2023/24 <br />through 2024/25, regardless of report or payment date. The amounts are limited to the indicated self - <br />insured retentions. Projected ultimate losses will be provided in both discounted and undiscounted <br />basis, based on the discount rate provided by the Client. <br />3. Project Losses Paid. Project losses paid during each fiscal year from 2023/24 through 2024/25. <br />Aon Proprietary and Confidential <br />Prepared for: The City a{ Santa Ana <br />