Reserve-accuracy metrics

For a benchmark, the values in the following table are calculated by the average-of-averages methodology described in "Overview of Compare."

Metric Description
Initial Reserve as % of Indemnity Incurred The sum of initial reserve amounts divided by the total indemnity incurred on applicable exposures, multiplied by 100. This metric excludes exposures that closed without any reserve.

This metric gauges the initial reserve amount in comparison to the current indemnity incurred. The metric is most relevant for closed exposures, for which a percentage near 100 indicates a high level of accuracy. An open exposure might be subject to additional reserve changes.
2nd Reserve as % of Indemnity Incurred The sum of 2nd reserve amounts divided by the total indemnity incurred on applicable exposures, multiplied by 100. The metric excludes exposures that closed without a second reserve.

This metric gauges the second reserve amount in comparison to the current indemnity incurred. The metric is most relevant for closed exposures, for which a percentage near 100 indicates a high level of accuracy. An open exposure might be subject to additional reserve changes.
3rd Reserve as % of Indemnity Incurred The sum of 3rd reserve amounts divided by the total indemnity incurred on applicable exposures, multiplied by 100. The metric excludes exposures that closed without a third reserve.

This metric gauges the third reserve amount in comparison to the current indemnity incurred. The metric is most relevant for closed exposures, for which a percentage near 100 indicates a high level of accuracy. An open exposure might be subject to additional reserve changes.
Reserve at n Days The mean of indemnity reserves plus non-eroding indemnity payments at n days, for exposures that were still open at the time specified and for which a reserve existed.

This set of metrics provides insight into n-day reserve practices for open exposures that have an established reserve; and enables you to compare later snapshots with earlier ones.
Reserve Accuracy at n Days The sum of reserves at n days divided by the sum of indemnity incurred, multiplied by 100. The metric excludes exposures that were closed in <=n days.

This metric gauges the n-day reserve amount in comparison to the current indemnity incurred. For open exposures, the division's denominator is the most recent indemnity incurred in the selected data set.

The metric is most relevant for closed exposures, for which a percentage near 100 indicates a high level of accuracy. An open exposure might be subject to additional reserve changes.