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RBC Charges (R5 - NWP Risk)

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Calculate the R3 RBC charge for NWP risk for all lines.

  current score:
0.000

R5 total RBC charge for all lines
   basic R5 charge (WC)
   LSD (Loss Sensitive Discount) (WC)
   PCF (Premium Concentration Factor) (all lines)
excessive growth charge
140
PREMIUM & LOSS INFORMATION LOB 1 LOB 2 WC
industry average L+LAE ratio (10 yr avg) 1.071
company average L+LAE ratio (10 yr avg)
industry L+LAE ratio (current yr)
adjustment for investment income
company NWP (current yr)
company U/W expense ratio (current yr)
portion of reserves on retro-rated plan: next 2 lines
   proportion that's direct loss-sensitive
   proportion that's assumed loss-sensitive
R5 RBC charge after loss-sensitive discounts ?


Equation 4

R5 base RBC (WC)
=   (current yr NWP)   x   [ (C x A) + U - 1 ]

C
=   company RBC L+LAE ratio

A
=   adjustment for investment expense

U
=   company U/W expense ratio

C is a 50/50 weighting between:

industry L+LAE ratio

industry L+LAE ratio adjusted for company experience

industry L+LAE ratio adjusted for company experience

   =   industry L+LAE ratio   x   (company average L+LAE ratio) / (industry average L+LAE ratio)

Equation 5

R5 after discount (WC)
=   R5 base RBC (WC)     LSD

LSD
=   R5 base RBC (WC)   x   (D% + A%)

   D%
=   30%   x   (proportion that's direct loss-sensitive)

   A%
=   15%   x   (proportion that's assumed loss-sensitive)

Equation 6

Final RBC after applying PCF (all lines)

=   (all lines RBC total before PCF)   x   PCF   +   (growth charge)

     PCF
=   0.7   +   0.3 x (max NWP by line) / (total NWP)

Solution:
R5 total RBC charge for all lines
   basic R5 charge (WC)
   LSD (WC)
   PCF (all lines) 0

C
   industry L+LAE ratio
   industry L+LAE ratio adjusted for company experience
A
U