Harmonic avg 2059 2087 1410 2816 1627 2192 1444 2009

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Harmonic Avg 20.59% 20.87% 14.10% 28.16% 16.27% 21.92% 14.44% © 2009 Society of Actuaries, All Rights Reserved Lewis & Ellis E37
Comparison of IBNR Methodologies Rate Shift Scenario (b) Cont. Results Set 3 Most Recent Incurral Months (< 50% Completion Factor) Mean IBNR Methods HMO Medicare HMO Professional Managed Care HMO Hospital Self Funded Major Medical Medicare Supplement LossRatio 7.58% 7.66% 8.30% 7.84% 7.59% 10.94% 11.60% PMPM 0.39% 0.47% 0.45% 0.45% 0.91% 0.44% 0.66% Paid PMPM 0.08% 0.09% 0.09% 0.18% 0.13% 0.19% 0.45% Benktander 12.67% 15.43% 12.05% 15.77% 17.61% 13.61% 17.29% Bornhuetter 15.80% 17.31% 15.22% 16.03% 16.36% 15.83% 17.40% Credibility Weighted 5.43% 7.79% 4.28% 8.22% 8.38% 8.95% 11.51% Hybrid Loss Ratio 6.10% 7.27% 6.22% 8.01% 8.76% 8.64% 10.46% Lag 12 Mo Avg 3.31% 10.44% 1.69% 15.02% 44.91% 10.53% 37.05% Lag 9 Mo Avg 3.12% 10.15% 1.57% 14.62% 43.94% 11.03% 37.50% Lag 6 Mo Avg 3.24% 10.61% 1.65% 15.00% 44.29% 11.20% 37.11% Lag 3 Mo Avg 2.75% 9.90% 1.37% 13.86% 42.50% 12.42% 35.79% Lag Cross Incurral 0.57% 0.48% 1.25% 0.05% 1.02% 2.88% 2.95% Lag Dollar Weighted 0.86% 2.30% 0.25% 2.98% 6.09% 0.79% 0.71% Lag Drop Extremes (10/12) 1.77% 7.02% 0.48% 11.15% 30.56% 7.15% 18.60% Lag Geometric Avg 1.93% 6.12% 0.87% 8.74% 23.07% 5.38% 16.06% Lag Harmonic Avg 0.76% 2.41% 0.19% 3.05% 6.51% 0.19% 1.68% Standard Deviation IBNR Methods HMO Medicare HMO Professional Managed Care HMO Hospital Self Funded Major Medical Medicare Supplement LossRatio 2.79% 2.91% 2.77% 2.50% 2.31% 2.51% 2.26% PMPM 2.80% 2.80% 2.73% 2.33% 2.27% 2.09% 1.84% Paid PMPM 2.60% 2.74% 2.59% 3.05% 2.47% 3.58% 6.45% Benktander 9.96% 16.85% 6.93% 9.20% 11.32% 8.06% 9.61% Bornhuetter 6.44% 10.46% 4.65% 5.50% 6.52% 5.59% 6.17% Credibility Weighted 10.07% 8.82% 9.24% 6.08% 4.10% 6.16% 4.13% Hybrid Loss Ratio 5.94% 9.61% 4.40% 5.25% 6.15% 5.57% 6.12% Lag 12 Mo Avg 21.16% 37.99% 15.04% 50.28% 96.19% 32.07% 51.55% Lag 9 Mo Avg 21.44% 38.47% 15.30% 50.78% 97.48% 32.77% 53.79% Lag 6 Mo Avg 22.14% 40.30% 15.77% 52.30% 100.90% 33.49% 59.72% Lag 3 Mo Avg 23.10% 42.68% 16.64% 54.24% 108.94% 37.77% 66.42% Lag Cross Incurral 19.04% 32.20% 13.66% 39.91% 60.58% 24.78% 28.39% Lag Dollar Weighted 20.59% 34.79% 14.77% 44.97% 69.32% 27.48% 33.49% Lag Drop Extremes (10/12) 20.99% 37.16% 14.81% 48.87% 87.05% 31.44% 45.08% Lag Geometric Avg 21.17% 36.91% 15.14% 48.42% 82.51% 30.62% 42.12% Lag Harmonic Avg 20.91% 35.48% 15.00% 46.18% 71.38% 28.60% 34.70% © 2009 Society of Actuaries, All Rights Reserved Lewis & Ellis E38
Comparison of IBNR Methodologies Rate Shift Scenario (c) - 15 percent rate increase implemented 14 months prior to the valuation date Results Set 1 All Incurral Months Mean IBNR Methods HMO Medicare HMO Professional Managed Care HMO Hospital Self Funded Major Medical Medicare Supplement LossRatio 43.51% 39.67% 35.20% 26.38% 16.71% 23.14% 15.60% PMPM 3.42% 4.55% 4.28% 4.22% 8.97% 2.39% 3.81% Paid PMPM 0.39% 0.58% 0.34% 1.02% 0.35% 1.18% 0.49% Benktander 8.65% 9.73% 7.32% 11.13% 9.47% 9.67% 11.63% Bornhuetter 13.41% 14.06% 12.82% 14.94% 12.91% 13.60% 13.69% Credibility Weighted 1.83% 2.26% 1.48% 3.51% 1.84% 3.33% 3.25% Hybrid Loss Ratio 0.73% 1.62% 1.71% 0.21% 0.54% 1.87% 1.77% Lag 12 Mo Avg 2.99% 6.88% 1.65% 10.56% 19.74% 8.31% 27.63% Lag 9 Mo Avg 2.98% 6.84% 1.75% 10.51% 19.43% 8.81% 27.99% Lag 6 Mo Avg 3.14% 7.47% 2.03% 10.91% 19.53% 8.96% 27.73% Lag 3 Mo Avg 2.97% 7.50% 2.06% 10.37% 18.95% 10.10% 27.00% Lag Cross Incurral 0.74% 0.94% 1.89% 0.98% 3.04% 2.68% 3.68% Lag Dollar Weighted 1.06% 1.53% 0.63% 2.69% 2.54% 0.10% 0.41% Lag Drop Extremes (10/12) 1.28% 4.27% 2.57% 4.16% 10.63% 4.73% 12.18% Lag Geometric Avg 2.00% 4.13% 1.22% 6.59% 10.12% 4.72% 11.96% Lag Harmonic Avg 1.04% 1.61% 0.70% 2.79% 2.63% 0.93% 1.19% Standard Deviation IBNR Methods HMO Medicare HMO Professional Managed Care HMO Hospital Self Funded Major Medical Medicare Supplement LossRatio 5.80% 6.40% 5.00% 6.12% 3.16% 5.09% 3.36% PMPM 10.30% 9.59% 8.55% 6.53% 5.14% 5.28% 3.81% Paid PMPM 3.65% 5.16% 4.02% 8.49% 3.84% 8.10% 9.15% Benktander 9.41% 13.03% 7.18% 13.17% 9.54% 9.11% 8.14% Bornhuetter 7.40% 9.88% 6.30% 10.89% 7.00% 7.74% 5.84% Credibility Weighted 9.09% 9.17% 7.88% 9.68% 5.66% 7.80% 4.97% Hybrid Loss Ratio 6.90% 8.95% 5.49% 9.87% 6.50% 7.65% 5.83% Lag 12 Mo Avg 15.68% 25.06% 10.32% 28.72% 39.70% 22.72% 38.62% Lag 9 Mo Avg 16.04% 25.52% 10.76% 29.36% 40.46% 23.34% 40.00% Lag 6 Mo Avg 16.62% 27.01% 11.12% 30.87% 41.80% 23.70% 44.20% Lag 3 Mo Avg 18.09% 29.47% 12.85% 33.74% 46.22% 27.06% 49.54% Lag Cross Incurral 14.08% 21.19% 9.27% 22.92% 25.25% 17.69% 21.43% Lag Dollar Weighted 15.37% 23.20% 10.27% 26.08% 29.31% 19.73% 25.40% Lag Drop Extremes (10/12) 15.57% 24.50% 10.02% 27.72% 36.02% 22.31% 33.75% Lag

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