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1 <br /> <br /> 3 <br /> <br /> 5 <br /> <br /> 7 <br /> <br /> 9 <br /> <br />11 <br /> <br />13 <br /> <br />15 <br /> <br />17 <br /> <br />19 <br /> <br />21 <br /> <br />23 <br /> <br />25 <br /> <br />27 <br /> <br />29 <br /> <br />31 <br /> <br />33 <br /> <br />35 <br /> <br />37 <br /> <br />39 <br /> <br />41 <br /> <br />43 <br /> <br />45 <br /> <br />47 <br /> <br />49 <br /> <br />prudent insurance practice. Notwithstanding the foregoing, the <br />Qualified Claims Auditor shall take into account Settlements of <br />Claims in accordance with the criteria set forth in this <br />Section, <br /> <br /> The Authority shall direct the Trustee to establish or <br />adjust Loss Reserves in the Claims Payment Fund. Loss Reserves <br />shall be initially established for each Coverage Period at the <br />time Participation Premium is due with respect to such Coverage <br />Period in accordance with the report prepared by an Actuary on <br />or before February 1 of each year. Adjustments in subsequent <br />Coverage Periods to Loss Reserves previously established shall <br />be based only upon establishment of and adjustments to Case <br />Reserves in accordance with the report of the Qualified Claims <br />Auditor described above. Such report of the Qualified Claims <br />Auditor shall be in a form such that Pure Premium AdjusEments <br />can be determined for each Participant, Coverage Period and <br />Risk Sharing Pool. The Authority may direct the Trustee to <br />establish Loss Reserves in excess of those designated in the <br />reports of the Actuary and Qualified Claims Auditor if the <br />Authority determines with the Qualified Claims Auditor the <br />existence of such facts and circumstances occurring during the <br />period covered by such report which deem it necessary to <br />establish excess reserves in accordance with prudent insurance <br />practice. Such annual adjustment shall be made on the <br />February 1 following receipt of the annual report of the <br />Qualified Claims Auditor. The parties acknowledge that under <br />certain circumstances it will be necessary to establish Case <br />Reserves in excess of the amounts then on deposit in the Claims <br />Payment Fund. In such event, such Case Reserves will <br />nevertheless be established as provided in this Section and <br />funded, through the payment of Pure Premium Adjustments, as <br />provided in Section 4.5 hereof. In the event that any such <br />adjustment to Loss Reserves results in the Low Reserves Mode <br />being in effect, the Authority shall provide prompt written <br />notice of such fact to the Participants and the Trustee. <br /> <br /> Upon the Settlement of any Claim and the payment thereof <br />from amounts on deposit in the Claims Payment Fund such amounts <br />shall be deemed reduced in the following order of priority: <br />first, from Case Reserves established to pay such Claim; <br />second, from Loss Reserves other than Case Reserves; third, <br />from Undesignated Reserves; and fourth, from designated Case <br />Reserves established to pay Settlements of other Claims (pro <br />rata among such other Case Reserves on the basis of the <br />respective amounts of such Case Reserves). <br /> <br /> Investment earnings retained in the Claims Payment Fund <br />shall be credited first to replenish designated Loss Reserves <br />which have previously been reduced to pay Settlements of other <br /> <br /> 18 <br />2658002/2 <br /> <br /> <br />