The total reserve deficiencies at Pilot Insurance Co., a subsidiary of CGU Group Canada Ltd., have been pegged at about $195 million, according to a quarterly report on group business results released by U.K., London-based parent Aviva plc. The latest information follows a recent shock announcement by CGU Canada that reserve deficiencies had been uncovered through an audit update of Pilot, which serves as CGU’s personal lines carrier in Ontario. The CGU announcement also stated that several key senior managers at Pilot, including former president Stuart Kistruck, had been removed from office. The Aviva announcement says that the shortfall in prior year claims reserves at Pilot will “impact” the group’s results for the current financial year by about $169 million. This equates to less than half of a percent of the group’s net assets as at the end of December 2002, the announcement observes. The $169 million tagged to the prior year reserve deficiency at Pilot breaks down to $77 million for “known case” reserves, and about $92 million for actuarial reserves. A further $26 million has been identified for “premium deficiency” reserving. “The reserve shortfall also indicates pricing inadequacy for Pilot” A statement released by Jim Hewitt, the new president of Pilot, emphasizes that the company is within regulatory solvency guidelines on a “pro-forma basis”. As previously stated, Pilot will be restating its 2002 financial statements in light of the reserve deficiencies, he notes. And, he adds, “we are working with the Financial Services Commission of Ontario (FSCO) to expedite the required rate filing process to bring the Pilot business to appropriate [rate] levels [from the current pricing inadequacy]”.