Via Facsimile and U.S. Mail
Mail Stop 6010
December 23, 2005
Mr. Thomas W. Burghart
Vice President and Treasurer
Delphi Financial Group, Inc.
1105 North Market Street, Suite 1230
P.O. Box 8985
Wilmington, DE 19899
Re: Delphi Financial Group, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2004
Filed March 15, 2005
File No. 001-11462
Dear Mr. Burghart:
We have limited our review of your filing to those issues we
have addressed in our comments. In our comments, we ask you to
provide us with information so we may better understand your
disclosure. Please be as detailed as necessary in your
explanation.
After reviewing this information, we may raise additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form 10-K for the Fiscal Year Ended December 31, 2004
Item 1. Business
Property and Casualty Insurance Reserves, page 9
1. It appears that you have significantly revised your estimate of
loss reserves recorded in prior years. Please tell us, in
disclosure-type format, the reason for your change in estimate.
For
each line of business, include the following information:
a. Identify the years to which the change in estimate relates and
provide the amount of the related loss reserve as of the beginning
of
the year that was re-estimated. Discuss and quantify offsetting
changes in estimates that increase and decrease the loss reserve.
b. Identify the changes in the key assumptions you made to
estimate
the reserve since the last reporting date.
c. Identify the nature and timing of the change in estimate,
explicitly identifying and describing in reasonable specificity
the
new events that occurred or additional information acquired since
the
last reporting date that led to the change in estimate.
d. Clearly explain why recognition occurred in the periods that it
did and why recognition was not required in earlier periods.
e. Discuss any trends such as, the number of claims incurred,
average
settlement amounts, number of claims outstanding at period ends
along
with average per claim outstanding, and any other trends,
necessary
to understand the change in estimate. Please explain the rationale
for a change in estimate that does not correlate with trends.
Item 7. Management`s Discussion and Analysis of Financial
Condition
and Results of Operations
Critical Accounting Policies
Future Policy Benefits and Unpaid Claims and Claim Expenses, page
27
2. We believe your disclosure in Management`s Discussion and
Analysis
regarding the reserve for unpaid claims and claim expenses could
be
improved to better explain the judgments and uncertainties
surrounding this estimate and the potential impact on your
financial
statements. We believe that disclosures explaining the likelihood
that materially different amounts would be reported under
different
conditions or using different assumptions is consistent with the
objective of Management`s Discussion and Analysis. Please provide
us
the following information for each of your lines of business, in
disclosure-type format, to help us evaluate the adequacy of your
disclosure.
a. The reserves accrued as of the latest balance sheet date
presented. The total of theses amounts should agree to the
amount presented on the balance sheet.
b. Because IBNR reserve estimates are more imprecise, please
provide
the amount of IBNR separately from case reserves for each line of
business.
c. Describe those assumptions that you believe are the most
significant in determining your loss reserves. For example
significant assumptions could be those assumptions that involve
the
greatest amount of judgment or those assumptions that have the
greatest financial impact on the loss reserve balance.
d. Describe the methodologies used to determine your loss
reserves.
For example this might include a discussion of the various
actuarial
methods used that may vary depending on the nature of the business
underwritten.
e. It is our understanding of the property and casualty insurance
industry that companies will establish reserves either by the
calculation of ranges around the reserves or by the calculation of
point estimates.
i. If management calculates a range in determining the loss
reserve
recorded in the financial statements, describe the range of loss
reserve estimates, the factors that determined the boundaries of
this
range and your basis for selecting the recorded amount rather than
any other amount within the range as the best estimate of incurred
losses. In addition include quantified and narrative disclosure
of
the impact that reasonably likely changes in one or more of these
variables (i.e. actuarially method and/or assumptions used) would
have on reported results, financial position and liquidity.
ii. If management calculates point estimates in determining the
loss
reserve recorded in the financial statements, disclose the
following:
1. The various methods considered and the method that was selected
to
calculate the reserves. If multiple point estimates were
generated,
describe the different values for these point estimates. Include
a
discussion of why the method selected was more appropriate over
the
other methods and why one point estimate was selected instead of
other point estimates.
2. Clarify whether the loss reserves recorded in the financial
statements are solely based on the point estimate calculated or,
if
not, how that estimate is used. Quantify and describe the
difference
between what is recorded in the financial statements and the point
estimate.
3. Include quantified and narrative disclosure of the impact that
reasonably likely changes in one or more of the variables (i.e.
actuarially method and/or assumptions used) would have on
reported
results, financial position and liquidity.
f. For each line of your longer tail business with claims for
workers` compensation and other highly uncertain exposures, please
provide more precise insight into the existence and effects on
future
operations and financial condition of known trends, events and
uncertainties. You should consider, but not be limited to,
includes
the following information:
* the number of claims pending at each balance sheet date;
* the number of claims reported for each period presented;
* the number of claims dismissed, settled, or otherwise resolved
for
each period;
* the nature of the claims including relevant characteristics of
the
claimant population (e.g., involves a large number of relatively
small individual claims of a similar type);
* the total settlement amount for each period;
* the cost of administering the claims;
* emerging trends that may result in future reserve adjustments;
and
* if management is unable to estimate the possible loss or range
of
loss, a statement to that effect.
Please respond to these comments within 10 business days or
tell us when you will provide us with a response. Please furnish
a
letter that keys your response to our comment and provide the
requested information. Detailed letters greatly facilitate our
review. Please file your letter on EDGAR under the form type
label
CORRESP.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision. Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in your letter, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Dana Hartz, Staff Accountant, at (202) 551-
3648
or Mary Mast, Review Accountant, at (202) 551-3613 if you have
questions regarding the comments. In this regard, do not hesitate
to
contact me at (202) 551-3679.
Sincerely,
Jim B. Rosenberg
Senior Assistant Chief
Accountant
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Mr. Thomas W. Burghart
Delphi financial Group, Inc
December 23, 2005
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