1 Year Development / Equity
Could you please share a numerical example on how to calculate this ratio?
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Could you please share a numerical example on how to calculate this ratio?
Comments
If you have access to an AA report, there will be a section for margin or deficiency of the unpaid across each AY. Summing that up over all lines of business and AYs, then dividing that by equity will give you this ratio.
In terms of the margin/ deficiency, calculation:
You will usually have an expected pattern of claims emergence at prior year-end, ex. a 10% emergence for a given AY in the current CY. If your current unpaid is 1000, then your expected emergence is 100. If your actual experience comes in at 120, then you have a deficiency of 100-120 = -20
Is numerator equivalent to Page 60.45, Column 40 - sum of (column 40) / Equity for the CY
I think it would just be row 199 of Page 60.45 which is column (40) as you mentioned.