It seems to me that the obvious way to adjust the outstanding reserves
would be to take the original exhibit (B) and multiply by 1.15 ^ age
(where the age of the most recent diagonal is 0, last years
diagonal=1, etc.), multiply by the number of claims, then add the
losses.
This doesn't work.
The sentence "the year-end 1976 average reserve was reduced by 15% per
year ..." seems to indicate how things should be done, but I can't
make much sense of it, at least not in any way that brings me to the
figures in Ex. F.
Am I missing something obvious? Being stupid? Can it not be derived
from the information given? Can I quit studying yet?
Many thanks,
J.T.
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