Gross UPR vs Net UPR
Based on Fall 2019 Q14, is the following correct:
- APV (gross UPR) = (UPR*ELR) + ULAE
- APV(net UPR) = ((UPR - Future reinsurance)*ELR) + ULAE
where ULAE is a % of either gross premium or gross losses.
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Based on Fall 2019 Q14, is the following correct:
where ULAE is a % of either gross premium or gross losses.
Comments
I think I see what you're trying to state but you have to be a little bit careful. The quantities on the right don't represent APVs. The quantities on the right represent the gross and net undiscounted amounts you would start with as a first step in calculating APV(net UPR).
Starting with the quantities you listed on the right side of your equations, you would apply discounting to get:
Once you have these, you can calculate APV(net UPR) as done in the examiner's report solution.