I was just working through Q1 on the September 2004 Paper and can't seem to figure out how they calculated the projection period for inflation for any of the years. e.g. In year 1 how did they arrive at mid september? Can anyone help please
think I can start you off. In year 1, an equal amount of business was written on 1 March and 1 Sep. Assuming risk spread evenly, then need to work out average exposure date. Risk written on 1 March exposed for 10 months, say 10 units, risk written on 1 Sep exposed for 4 units - hence 14 units in total. So average exposure period after 7 units, which is mid-Sep (bearing in mind 2 units per month from Sep to Dec). In year 2 same sort of thing. Business written in year 1 is exposed for the whole year, 24 units (on average 6 months from year end). Business written in Y2, exposed for 14 units (average mid-Sep, 3.5 months from year end as above). So 38 in total. Half is 19 units which I reckon mid-point would be 1 Aug (since 4 units per month Sep-Dec and 3 units in Aug). Bu they seem to have just averaged 6 and 3.5 to get 4.75. No big deal only 8 days out!!!
