Which formula correctly represents the calculation of Open Total Loss Reserves?

The calculation of Open Total Loss Reserves is accurately represented by the Ultimate Loss Estimate minus Total Paid Losses. This formula reflects the insurance company's need to estimate future liabilities accurately while accounting for what has already been paid out in claims.

Ultimate Loss Estimate represents the total expected losses that the company anticipates will eventually need to be paid out. By subtracting the Total Paid Losses, which accounts for the losses that have already been disbursed, the remaining amount reflects the Open Total Loss Reserves that are still available to cover future claims.

This approach ensures that the insurer maintains sufficient reserves to meet its obligations, adhering to fundamental principles of actuarial science and financial management in insurance operations. It highlights the importance of understanding both the total liabilities and the payments already made to ascertain the funds needed for outstanding claims properly.