CAS Sample Q25 - payment pattern
For the payment pattern, could you clarify why we need to find "% paid incremental remaining" and not use the raw "% paid incremental"?
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For the payment pattern, could you clarify why we need to find "% paid incremental remaining" and not use the raw "% paid incremental"?
Comments
That's because you are viewing things at the end of 12 months (You have already paid out 52% of ultimate and are only left with 48% to pay out). So from months 12 to 24, you will pay out 20% of the total ultimate, but there is only 48% remaining to be paid which means you pay out 0.2/0.48 of the remaining 48% of ultimate losses (28M).
Just to clarify, does the 52% payment occur around mid-2024? And the remaining payments made mid-2025, mid-2026, etc.?
That's correct
Thank you
Q25 vs. Q11, if the payment pattern is for the expected future cash flows, then we are directly use the ratio?
i am a bit confused to when we can directly multiply the ratio and when to calculate like the way in Q25
In Q11 they have stated in the question that they already rebalanced the payment patterns for you that's why you directly apply the payment pattern without any adjustments