Chapter 2 Analyzing the Business Case
MULTIPLE CHOICE
1. Systems development typically starts with a _.
a. feasibility study, followed by a systems request, which includes a preliminary
investigation
b. systems request, followed by a preliminary investiga

korporativne povelje za obeshrabruje spajanja. Ove promjene
ukljuuju: Zamaknute Uvjeti za Board Korisnika: Samo nekoliko
lanova odbora biraju se svake godine. Kada sticanje kontrole firma
dobiti ciljnog drutva, vane odluke su tee od sticaoca nedostaje
pun

1,397 1,606 1,768 2,168 2,215 2,548 2,804 2,452 2,820 2,531 Figure 5 It
is now possible to compare Figure 5 with Figure 1. However, it is
preferable to look at the increases in cumulative payments when
considering the fit of the model. This gives a more s

IFE: 2010 Examinations The Actuarial Education Company The table in
the example above showed the amounts of paid claims tabulated by
accident year. Various alternative tabulations could have been used.
For example: 1. The cohorts could be defined by repor

year i. xi+j is a parameter varying by calendar year, for example
representing inflation. eij is an error term. Accident Year Development
year 0 1 . j . . n 0 C0,0 C0,1 . C0,
j . . C0,n 1 C1,0 C1,1 . C1, j . C1,n1 # # # i
Ci,0 Ci,1 Ci,ni # # # # # # Cn1,1

combines the estimated loss ratio with a projection method. Here,
projection method refers to methods such as the basic chain ladder
method which are based on past claim amounts and/or numbers. It
therefore improves on the crude use of a loss ratio by tak

received in each of the years 2005 to 2008 were 1.42m, 1.64m,
1.73m and 1.82m. Loss ratio Development year 0 1 2 3 2005 47%
63% 70% 74% Accident year 2006 48% 62% 71% 2007 49% 60% 2008
50% 1.6 Assumptions underlying the method The chain ladder
technique i

or 2 from the ones shown, depending on how you have rounded your
intermediate figures. Dealing with future inflation The predictions of
cumulative payments do not, however, take account of future
inflation. In order to forecast the actual payments, an ass

example, changes in accounting methods or claims administration can
alter the speed with which claims are settled. This would give rise to
changes in the development factors and it would be sensible to reflect
this in the estimate of future claim payments

Run-off triangles IFE: 2010 Examinations The Actuarial Education
Company 6 Exam-style question Past exam question (Subject C2,
September 1998, Question 9) The table below shows cumulative
claims (not adjusted for inflation) from a portfolio of insurance
p

particular accident year is the last known figure in the run-off triangle
for that accident year. The ultimate liability is the sum of the emerging
liability and reported liability. The total ultimate liability relating to
these six accident years is, the

the total ultimate loss (UL) for each accident year. This figure of 83%
(or whatever) would normally be derived from a different source from
the data in the triangle. Initial estimate of total ultimate losses, by
accident year: AY 1 2 3 4 5 6 EP 4,486 5,0

provide more information. Thus, the greater the amount of claims, the
more confidence you can have in the ratio. Note that were assuming
a large number of claims here, which would lead to a more
predictable average, not a small number of very large claims

unpredictable. When using run-off triangles, you should always be on
the look out for factors that may distort the pattern of the run-off. It
may be possible to allow for distortions by adjusting the figures
produced by the triangle. The chain ladder meth

follows: 2002 2003 2004 2005 5.1% 6.4% 7.3% 5.4% For simplicity, it is
also assumed that payments are made in the middle of each calendar
year. An index can now be calculated in order to convert all payments
to mid-2005 prices. 2005 has been chosen becaus

2,142 2,216 2,515 2,880 2,440 2,796 2,519 Figure 1 Each row in the
triangle represents an origin year which defines a cohort of claims.
This example uses an accident year cohort. Because a lot of statistical
theory in general insurance was developed in re

However, it is not clear exactly how large the differences should be
before we start to doubt whether the model is accurate. Question
11.10 Apply this technique to the data in Question 11.9 and comment
on any unusually large error figures. Question 11.11

grossing-up factors and projected ultimate figures given in the
following table (the projections are based on the, underlined, simple
averages of the grossing-up factors). Average claim amounts DY 0 1 2 3
4 5 Ult 1 6.708 89.2% 7.096 94.3% 7.162 95.2% 7.36

2008 65 3.4 Assumptions underlying the method As there is no unique
way of defining the method, there is no unique set of assumptions. In
particular the assumptions relating to inflation will depend on the
data used. In general terms, however, there are t

assuming that the first origin year is fully run-off. Page 24 CT6-11: Runoff triangles IFE: 2010 Examinations The Actuarial Education
Company 3 The average cost per claim method This method, considers
separately the two key elements of total claim amounts

nastanka ABC Recesija 0,25 10% 9% 14% Prosjek 0,50 14 13 12 BOOM
0.25 16 18 10 Trae a. Nai svaki oekivana stopa projekt povratka,
varijanca, standardna devijacija i koeficijent varijacije. Lekcija tri
finansijske UPRAVLJANJE 53 b. Izraunati koeficijent ko

industrijama gdje je vjerovatno rast budunost. Treba napomenuti da
tradicionalne financijskog upravljanja ne uvijek podrava
diversifikaciju kroz spajanja i akvizicije. Smatra se da su investitori u
najboljoj poziciji da diverzificirati, ne menadment kompa

some extent it doesnt really matter both are valid methods of
completing a run-off triangle. The Core Reading uses development
factors for the basic chain ladder method, the inflation-adjusted chain
ladder method and the Bornhuetter-Ferguson method. It us

chain ladder method contain a combination of the patterns of the
average amount and the numbers of claims. By analysing these
separately, we hope to get a more accurate projection. You may also
be asking: If an exam question asks for the ACPC method, what

the loss ratios with the development pattern. 5.2 Description of the
method In its simplest form the concept leads to the following
approach to calculations: 1. Determine the initial estimate of the total
ultimate claims from each origin year using premiu

respect of claims relating to the data in the table. An example is given
below to illustrate this process. CT6-11: Run-off triangles Page 25 The
Actuarial Education Company IFE: 2010 Examinations 3.2
Application of the method The average cost per claim me

relate this formula to the explanation given above: 1 Step 1 gives you
premium expected loss ratio 2 Step 2 gives you premium expected
loss ratio 1/f 3 Step 3 gives you Step 1 minus Step 2, which is the
formula given. As the final estimate of the ultimate

So that would mean we would have 4,170 4,174 4 - =- to pay out in the
future (ie we expect a rebate of 4 next year). Page 38 CT6-11: Run-off
triangles IFE: 2010 Examinations The Actuarial Education Company
(v) We have actually incurred so far 4,319 (from

is the simplest form, which was outlined on page 33. For the original
method, the underlying assumptions are the same as for the basic
chain ladder method, together with the assumption that the
estimated loss ratio is appropriate. CT6-11: Run-off triangle

grossing-up factor gives the proportion of the ultimate claim amount
that has been paid so far. Suppose that we had cumulative payment
amounts of: 500 800 1000 1,100 The development factors for this row
would be: 800 500 = 16. 1,000 1.25 800 = and 1,100 1