exercise:F65383a2a3: Difference between revisions
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Calculate the total IBNR reserve as of December 31, CY3 using the Bornhuetter-Ferguson method. | Calculate the total IBNR reserve as of December 31, CY3 using the Bornhuetter-Ferguson method. | ||
<ul class="mw-excansopts"> | |||
<li>240,000</li> | |||
<li>260,000</li> | |||
<li>290,000</li> | |||
<li>310,000</li> | |||
<li>340,000</li> | |||
</ul> | |||
Latest revision as of 20:57, 24 October 2024
You are given:
- Earned premium in CY1 was 500,000.
- Earned premium growth through CY3 has been constant at 10% per year (compounded).
- The expected loss ratio for AY1 is 40%.
- As of December 31, CY3, the expected loss ratio has increased 3 percentage points each accident year
- Selected incurred loss development factors are as follows:
| 12 to 24 months | 1.25 |
| 24 to 36 months | 1.2 |
| 36 to 48 months | 1.1 |
| 48 to 60 months | 1.07 |
| 60 to 72 months | 1.05 |
| 72 to ultimate | 1.000 |
Calculate the total IBNR reserve as of December 31, CY3 using the Bornhuetter-Ferguson method.
- 240,000
- 260,000
- 290,000
- 310,000
- 340,000