Hey All, Any one with an elaborate explanation on how the figures for the BF method for question 7 (ii) for Dev. and UY ULR rows are arrived at? Many Thanks, Francis
The Dev row is derived by interpolating the annual pattern provided in the question to make it appropriate for a mid-year review, eg based on the original pattern the percentage developed at development year 1 is 1/4.55=22.0% and at development year 2 it is 1/2.11=47.4%. Linearly interpolating between the two gives 34.7% developed for the 2016 underwriting year as at 30 June 2017. The underwriting year ULR is then derived using the standard BF formula. So for the 2016 underwriting year, the BF Ultimate = 4.57+(1-0.347)*77%*14.63=11.93, which gives an ULR of 11.93/14.63=82%. You can find the full solution in the ASET.
Hi Darren, Thank you for your feedback. I am now completely satisfied with your solution. I am also very disappointed to hear that I am not aware of the existence of ASET since I became an IFoA member. I would be interested in joining...likely after April 2018 exams.
Hi Francis ASET stands for ActEd's Solutions with Exam Technique. For Subject ST7 it contains the last 8 exam papers along with ActEd’s full solutions including techniques for tackling exam questions. ASET is fully up-to-date in respect of changes to the Syllabus and Core Reading. It includes not only a possible solution to each question on the exam paper, but also comments to help you with your exam technique, alternative approaches and references to the course material. You can find our more about ASET from our website: https://www.acted.co.uk/paper_aset.html I would strongly recommend it as a revision tool for this April's exam as well!
Hi Darren, Would you mind sending me the current ASET fees for the reduced rate? e.g. the way IFoA does as attached. I need to make a decision.
There is some information about our prices, including reduced rate prices on our website: https://www.acted.co.uk/ordering_reduced_rate_material.html If you have any questions about these, please email our admin team (ActEd@bpp.com) who will be very happy to help you.
In converting UY ULR to AY ULR, do we apply linear interpolation similarly? What is the explanation behind this?
No I don't think there's any linear interpolation to convert UWY ULR to AY ULR. Once you get your UWY ULRs, you need to find the earned premiums and ultimate claims on an accident year basis to be able to calculate the AY ULRs. A few assumptions would be needed such as assume reinsurance contracts are written on a risk attaching basis and they incept on 1st Jan. This would imply a two year exposure period. So for earlier AYs till 2016, 50% will be earned from previous UWY's written premiums and 50% from current year's. Also assume underlying contracts written uniformly over each month so, on average incepts in the middle of the month. So for: 1st Jan 2017 till 30th June 2017, if you work out the %earned, I think you'll get 37.5% and 12.5%. You then apply those same percentages to the previous and current years' BF ultimate claims that you got from the UWY basis. This will give ultimate claims on an AY basis. Once you get earned premiums and ultimate claims on an AY basis, you can work out the AY ULRs then.
