Chapter 13, q 13.24

Hi all,

Quick q, can someone explain how the answer of 94 for the O/S claims is reached here in the B.F method [part (iii)]? A worked run through would be most helpful, I can't seem to match it for some reason?

Thanks in advance

 

Thanks Katherine, that's a relief I thought I was losing the plot! Do I win a prize?!

 

I would have preferred a cash equivalent, but it'll do

 

Hi Katherine

I've never met the Bornhuetter-Ferguson method before (I got an exemption from CT6), so I struggled with this question in the notes. Please could you explain how to calculate the "Factors to ultimate" part of your worked solution.

As an aside, do you think it would it be worth me buying the CT6 revision booklet to cement my background knowledge?

Many thanks.

 

Bihac,

This may not be an answer to your question but i am just curious on how you got an exemption from CT6 without ever coming across the BF method. Well, if your are studying for ST7, you may need to brush up the notes especially on reserving methods.

To answer your question, the factors to ultimate are calculated by 'cummulatively' (for lack of another word) multiplying the development factors.

E.g. from the example refered to, it is calculated as such:

1.0014= 1*1.0014
1.0847 = 1.0014(previous answer) * 1.0832 (next DF)
1.3531 = 1.0847(previous answer) * 1.2474(next DF)

You can try the last one.

 

Thanks - much appreciated

I did an actuarial science degree but the lecturers swapped each year and pretty much taught what they want. I guess the Institute are willing to grant acredition status to a degree course if it covers say 90% of material - just bad luck that BF method was in the other 10%.